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1 FACULTY OF PURE SCIENCES CULTURE AND BUSINESS ENTREPRENUERSHIP: A CASE STUDY OF MAURITIUS A study submitted in partial fulfilment of the requirements for the degree Master of Science in Information Systems AT THE UNIVERSITY OF SHEFFIELD BY ANGELINAH C. BONIFACe SEPTERMBER 2008

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1

FACULTY OF PURE SCIENCES

CULTURE AND BUSINESS ENTREPRENUERSHIP A CASE STUDY

OF MAURITIUS A study submitted in partial fulfilment of the requirements for the degree Master of Science in Information Systems

AT

THE UNIVERSITY OF SHEFFIELD BY

ANGELINAH C BONIFACe

SEPTERMBER 2008

i

TABLE OF CONTENTS

Contentshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipi Dedicationhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipiv Acknowledgementshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipv List of Abbreviationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipvii List of Illustrationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipviii Abstracthellipix 10 INTRODUCTION 1

11 Background to the study4

12 An Overview of Mauritian Economy8

13 Mauritius SME Background10

14 Purpose of Statement12

15 Aims and Objectives12

16 Research Questionshellip13

161 Sub-Questions13

17 The Significance of the Study13

17 Definitions of Termhelliphelliphellip14

20 LITERATURE REVIEWhelliphellip16 21Embracing Cultural Challenge in an Era of Globalisation16 22The Dynamics of Culture as a Multi-level Multi-layer Construct20 23International Business and Culture23 24Putz Model for Immigrant Business and Culture25 25 The Role of Information Communication Technologies30 26Cross Culture and International Business33

ii

27Investing in Mauritius35 30 METHODOLOGY37 31Research Setting39 32Methods40 33Research Participants and Sampling42 34Data collection Instrumentshelliphellip43 35Ethical Considerationshelliphellip44 36Procedure45 37Data Analysis46 38 Planned Programme of Dissemination47 39Time Scale48 310 Limitations and Delimitations48 40 RESEARCH FINDINGS AND DISCUSSION50 41Respondents Rate According to Sectors51 42Demographic Profile Participants52 43Characteristics of Responding Firms55 44Language57 45Religion 59 46Social life61 47 Market Accessibility63 48The Role of ICT to SME Business in Mauritius 66 49Governance and the Role of Women in SME sector in Mauritius68 410 Challenges Faced by the Country and Hence SME investors70 50 CONCLUSION AND RECOMMENDATIONS72 60 REFLELECTIONS FROM THE STUDY77

iii

70 FURTHER RESEARCH78 80 APPENDICES80 81 Apendix 180 82 Apendix 281 83 Apendix 382 84 Apendix 483 85 Apendix 586 90 REFERENCES87

iv

DEDICATIONS

To my father Shadreck Boniface who passed on before I could give back all

the good things you did in my life you will always be remembered by me for

the gap you left in my life no one can replace may his soul rest in peace To

my mother in recognition of your worth for all the support you gave A feeling

bears on itself the scars of its birth it recollects as a subjective emotion its

struggle for existence it retains the impress of what might have been but is

not and hope if the fool would persist in his folly he would become wise To

my daughter and to all my family and friends this is for you

THE BOTSWANA FLAG

The Botswana flag was officially adopted on September 30 1966

The colours on the flag correspond to those on the national coat of arms The

blue represents water the white-black-white bands depict the racial harmony

of the people as well as the pluralist nature of the society They are inspired

by the coat of the zebra the national animal

v

This report is dedicated to all those who spend their daily lives trying to cope

with the challenges of HIVAIDS and all those who are affected by this

disease and to the new AIDS free generation

ACKNOWLEDGEMENTS

My sincere gratitude to all whose knowledge skills experience and support

went into this work First are the authors of various literatures whose work

guided this dissertation Overly important too are all those participants who

offered their resources and business experiences which has influenced the

outcome of this paper

To the University of Sheffield thanks for the opportunity to pursue this course

at your institution and the experts you provided to teach various aspects of the

course A lot of thanks to the course leader and my supervisor Dr Kendra

Albright for all the guidance and motivation she provided during the entire

programme Moreover for the opportunity she gave me to pursue this

research Thanks too to the rest of the tutors especially Dr Barry Eaglestone

who refined my research knowledge and skills Special thanks go to my

sponsor The Commonwealth Scholarship for providing funds for me to purse

my programme To my Administrator Dr Fiona Groccut and Sarah Ferdecio

thank you for the fast response you would give whenever I needed your help

A special thank you to Richard Campos the Managing Director for

RCBusiness Support Ltd for the support you throughout this project

I could not do without the invaluable family support from my sister Juliet

Shadreck and my mom Monica Boniface thank you mum Particular thanks

to Theo my daughter who I left at a tender age to come and pursue this

vi

course To Gobonaone Keaosenya thanks for your moral and emotional

support you gave during my studies To my family Lebo Kay Goitse Kgosi

Monica Jullie Douglas and all other friends not mentioned thanks for your

moral support Thanks to my family for their prayers and support

Thanks too to all my MSc in Information Systems classmates for sharing their

extensive and diverse knowledge skills and experiences during the course I

acknowledge friends and colleagues in Botswana who encouraged me to

pursue this programme particularly Dr Jorosi for the inspirational advice

Special thank to my sincere friend Patience Chakandinakira for her moral

supportTo Dr Phil Lyoka thank you for the editing and grammar corrections

and all the support you gave throughout this project

Due to technical limitations I am not able to list everyone but I OWE ALL OF

YOU who provided moral academic technical economic support or

otherwise a very BIG THANK YOU including whoever reads this work

vii

LIST OF ABBREVIATIONS

BIDPA Botswana Institute for Development Policy and Analysis BOI Board of Investment ESRC Economic And Social Research Council EPZ Export Processing Zones FDI Foreign Direct Investment GDP Gross Domestic Product GSP General System of Preferences IB International Business ICT Information Communication Technologies ILO International Labour Organisation IT Information Technology ISO International Organization for Standardization IVTB Industrial and Vocational Training Board MEDIA Mauritius Enterprise Development Investment Authority MNC Multinational Companies NAFTA North American Free Trade Agreement NHPA National Handicraft Promotion Agency OECD Organisation for Economic Co-operation and Development SADC Southern African Development Community SEHDA Small Enterprises amp Handicraft Development Authority SME Small and Medium Enterprise SMME Small medium and micro-enterprises SMIDO Small amp Medium industries Development Organisation UK United Kingdom UN United Nations USA United States of America WTO World Trade Organization

viii

LIST OF ILLUSTRATIONS TABLES Table 1 THE STUDY TIME SCALE

2 RESPONDENTS RATE ACCORDING TO SECTORS

3 AGE GROUP AS PER PARTICPANT

4 GENDER PROFILE

5 EDUCATION PROFILE 6 YEARS EMPLOYED AS CEO 7 COMPANY AGE PROFILE 8 NUMBER OF EMPLOYEES 9 ANNUAL SALES 10 OWNERSHIP

FIGURES 1 MAP OF MAURITIUS SHOWING ALL PROVINCES

2 MAURITIUS MAP SHOWING POLITCAL DIVISIONS

3 THE DYNAMIC OF TOP-DOWN-BOTTOM-UP PROCESS ACROSS LEVELS OF CULTURE

4 PUTZ MODEL FOR IMMIGRANT BUSINESS AND CULTURE

5 THE BASIC MECHANISM OF INTERNATIONALISATION-STATE AND CHANGE ASPECT

ix

ABSTRACT

In this new millennium few executives can afford to turn a blind eye to global

business opportunities The globalizing wind has broadened the mindsets of

executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories One such new

trajectory is the concern with national culture Whereas traditional IB research

has been concerned with economic legal issues and organizational forms and

structures the importance of national culture has become increasingly

important in the last two decades largely as a result of the classic work of

Hofstede (1980) National culture has been shown to impact on major

business activities from capital structure (Chui et al 2002) to group

performance (Gibson 1999)

The purpose of this study was to understand the concept on how to penetrate

a new international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

Data was collected through telephone interview web survey literature review

and face to face interview involving business managers legal stakeholders

and government officials and former government ministers About 17

telephone interviews were done with only government officials 4 face to face

interviews and 140 web survey interviews questions All the respondents were

x

randomly selected and respondents would suggest further participants Data

was put in to categories and themes and analysed according to those themes

Putz (2000) model was used as guide to selection of themes

Findings revealed the following 1 Language and religion are not a barrier to

foreign investment in Mauritius 2 Mauritius is a peaceful and tolerant nation

and most of its social life revolves around family and friends 3 Market

opportunities exits in the manufacturing industry offshore financial services

cyber culture and the construction industry 4 The country‟s business

economy faces stiff competition from Botswana South Africa and Vietnam 5

The government plays an important role in ensuring security for foreign

investors

From the results it was concluded that culture plays an important role in the

daily lives of the Mauritian people but it does not have a direct impact to

investment in Mauritius

1

CHAPTER ONE

INTRODUCTION

Globally Small and Medium Enterprises (SMEs) are increasingly regarded as

vital for diversifying economies through the creation of employment

(Machacha 2002 p 277) The OECD (2000) notes that small and medium-

sized enterprises account for 60-70 percent of jobs created in member

countries Southwood (2004) in discussing the status of the SME sector in

Africa observed that governments and large corporations dominated

economies of the countries yet the real engine of economic growth lay with

SMEs Muuka (2002 p 1) in discussing the SME sector in Africa noted that

the informal sector is huge due to the large numbers of employees it absorbed

as a consequence of inadequate jobs and opportunities in the formal sector

The author points out that in many African countries the informal sector is

estimated to employ from three to six times the number of employees in the

formal sector However very little has been documented through research

about this important sector

In Mauritius the Mauritian government believes that the real engine of

sustainable and equitable growth is in the SME sectors Not only is it of great

importance for the rate of job creation and income generation but also it

deserves particular attention since the sector has been largely neglected in

the past In this respect this study of Mauritius is important in addressing

some of issues of culture by using the International business as a framework

for this study to understand the business environment in Mauritius and the

potential for growth in a global perspective (Stone 1997)

2

In this new millennium few executives can afford to turn a blind eye to global

business opportunities Japanese auto-executives monitor carefully what their

European and Korean competitors are up to in getting a bigger slice of the

Chinese auto-market Executives of Hollywood movie studios need to weigh

the appeal of an expensive movie in Europe and Asia as much as in the US

before a firm commitment The globalizing wind has broadened the mindsets

of executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories

However research shows that as markets competition and organisations

globalise the business people businesses themselves and consumers

involved in these institutions increasingly have to interact manage negotiate

and compromise with people from different cultures (Hofstede 1997

Hoecklin 1995) Global business managers report that when doing business

overseas challenges mount For example structural conditions physical

social and economic arrangements can affect business operations and

outcomes as can the varied norms and behaviours that come with different

national cultures

One such new trajectory is the concern with national culture Whereas

traditional IB research has been concerned with economiclegal issues and

organizational forms and structures the importance of national culture

broadly defined as values beliefs norms and behavioral patterns of a

national group (Hofstede1980) has become increasingly important in the last

two decades largely as a result of the classic work of Hofstede (1980)

3

National culture has been shown to impact on major business activities from

capital structure (Chui et al 2002) to group performance (Gibson 1999) For

reviews see Boyacigiller and Adler (1991) and Earley and Gibson (2002)

Weisinger and Trauth (2003) report that culture evolves and takes unique

forms in local offices of organizations This means that culture is both dynamic

and situated in its local context Thus external conditions both structural and

cultural can influence global business Yet small and medium enterprise

(SMEs) managers can have an impact on how their organizations‟ cultures

evolve Therefore strategic leaders need to introduce unique norms values

and processes that fit together coherently in successful organizations

Therefore the main purpose of this case study is to explore and understand

the Small Medium Enterprise (SMEs) business environment in Mauritius and

how SMEs can penetrate the business culture there

The purpose of this paper is therefore to explore and understand how national

culture influences international business decisions and how to culture affects

international business investment using Mauritius as a case study

In this chapter the author outlines the background of the study specifies the

study objectives describes the significance of the study gives methodological

overview and finishes off by outlining definitions of key terminologies

4

11 Background to the Study

Strategically located in the Indian Ocean at the crossroads of Africa and Asia

Mauritius is reputed for its beautiful countryside and its 150 kilometres of white

sandy beaches and transparent lagoon A British colony that gained

independence in 1968 officially known as Republic of Mauritius the country is

positioned to the east of the Madagascar Islands The geographical

coordinates of the nation are 20ordm17 South latitude and 57ordm33 East longitude

The total area covered by the island nation is 2040 square kilometres

Mauritius enjoys a maritime sub-tropical climate and is therefore an all-year-

round holiday destination From a monocrop economy depending mainly on

sugar it has diversified its economic activities into textile and apparel

industry tourism and financial service Mauritius has witnessed a massive

development in the last decades (SMIDO 2006)

5

Figure 1 Map of Mauritius showing all Provinces

Source Encarta World atlas online

6

Figure 2 Mauritius map showing political divisions of the country

Source Maps of the world online

The research area was around the capital city Port Louis marked in red For

anonymity the site was just called A or B Administratively Mauritius is divided

into nine Provinces (figure 2)

The country is remarkable in its ethnic diversity It forms a unique mosaic of

immigrants from the Indian sub-continent Africa Europe and China The

cultural diversity and harmony of the island make Mauritius a unique place in

the world The various religions found on Mauritius tend to play a major part in

7

the islands cultural events and churches temples and mosques are to be

found everywhere Hindus make up approximately half of religiously affiliated

Mauritians followed by Muslims and Christianity as the minority It is also

known for its social peace political stability and racial harmony Its steady

economic growth over the years coupled with its nation‟s social cohesion and

prosperity ensure continuing development (Country Profile 2005)

The country is equipped with a highly skilled labour force to suit virtually all

business in two international languages English and French and a very good

infrastructure thereby attracting Foreign Direct Investment The average

economic growth was 56 over the last 3 years The income per Capita has

reached 4000 US Dollars As a result the standard of living has gone up The

country has now a life expectancy rate of 714yrs an adult literacy rate of 83

(Country Profile 2005)

To face globalisation and a new economic environment the Government has

taken several steps High value-added capital intensive and knowledge-

based activities are on the priority list The Information Technology sector is

undergoing rapid changes so as to be fit for the next millennium The aim is to

make Mauritius a centre for high-tech and software services which can be

exported (Commonwealth Secretariat 2006)

8

12 An Overview of Mauritian Economy

The economy of Mauritius has experienced major structural transformation

over the last two decades The country has moved away from a mono-crop

economy with fast population growth high unemployment and low per capita

income to one that is more dynamic and diversified The sources of

diversification have been agriculture export manufacturing (mainly textile)

tourism and more recently international services with Offshore and Freeport

activities (Country profile 2005)

To respond to the global competition in these sectors Mauritius has made

extensive use of modern technology to improve its productivity and efficiency

The real growth rates have been around 54 over the past four years and

Mauritius is now classified as a middle-income country and is one of the

healthiest economies in the whole African region (Country profile 2005) The

sugar sector provided the start-up capital for the Export Processing Zones

(EPZ) The rapid rate of growth of investment in the manufacturing sector

(investment grew by over 30 each year from 1983 until the late 1990s in this

sector) that led to the success of the EPZ and the Mauritian economy as a

whole This was made possible by the confidence of entrepreneurs and

foreign investors prevailing in the country at that particular time The private

sector accounts for approximately 70 of total capital formation in Mauritius

Investment rate stood around 27 in the four years ending 1996 peaking to

30 in 1994 (SMIDO 1996)

9

When the government recommended the diversification of the economy with

the creation of Export Processing Zones in the early 1980‟s the EPZ sector

benefits from duty-free and quota free access into European Union markets

granted under the Lomeacute Convention as well as tariff preferences granted

under the General System of Preferences (GSP) by countries such as North

America and Japan The mid 1980s witnessed a textile boom raising per

capita incomes and living standards However the conclusion of the Uruguay

Round (General Agreement on Trade amp Tariffs) implies the loss of guaranteed

markets and preferential access which will result in strong competition in

these respective markets (Country profile 2005)

The new strategy of the industrial sector aims at targeting high quality and

high value added products with a view to restoring the competitiveness of the

goods by applying latest technology to the manufacturing industry and hence

improving the quality of the finished products Limited data is available

regarding the SME sector in Mauritius The current research has observed

that there is little research in the field in SME sector in Mauritius

In view of the importance of foreign investment as a source of sustenance to

economic growth the government of Mauritius has taken a series of policy

measures to encourage its flows into manufacturing offshore banking and

financial services information technology communication and tourism As far

as foreign investors are concerned Mauritius offers itself as an attractive

destination because several positive features such as political stability

10

availability of skilled labour and investment-friendly rules and institutions

(Stone 1997)

With such a promising economy there is virtually no evidence on how to

penetrate the business culture in Mauritius and how culture can affect SMEs

and business opportunities therefore this study will explore and understand

the business environment in Mauritius and the challenges of doing business

there as a foreign investor Currently there is very little research done on

SMEs and culture in Mauritius

13 Mauritius SME Background

Experience shows that attitudes towards small business vary from decade to

the next from country to country Before the industrial revolution all business

was small business but with industrial and commercial expansion of

developed nations small has become medium and medium has become big

business

Business owners and managers have often seen growth as an end in itself

and at time the cry get big or get out has been heard in most nations

(Meredith 2004) For more than two decades SMEs have experienced

favourable growth SME has long been prominent in the countrys economy

and make up a large portion of national economy in terms of output

employment and effective utilisation of regional resources Small and medium

enterprises in Europe make up 998 of all European enterprises provide

66 of its jobs and account for 65 of its business turnover (Meredith 2004)

11

In developing countries SMEs account more than 90 of all enterprises

Over the last five years they have been responsible for more than 80 of job

created (Stone 1997) On the issue of job creation Stone (1997) found that

SMEs create more employment than large enterprises and with a lower

investment per job created SMEs are not usually associated with international

activity but they do in fact play a significant international role and their

importance appears to be increasing Available data on SMEs international

activity are very limited (Stone 1997)

In general terms and depending on the country SMEs contribute between

15 and 50 of exports and between 20 and 80 of SMEs are active

exporters Overall it is estimated that SMEs now contribute between 25 and

35 of world-manufactured exports (UN 2005) Increased exports not only

boost the level of sales and employment but also extend the life cycle of

goods and services

In Mauritius SMEs represent 19 according to a report issued by the

Commonwealth Secretariat entitled a Study of Small Firm export Policies

and Institutions in Mauritius Subsequently these SMEs have developed

gradually and move from their tradition orientated operations to export-led

firms probably due to improvement of technology in the field of communication

and the new economic dimension which prevailed

At this juncture it is important to report that few studies on culture and small

and medium entrepreneurship have been conducted on Sub-Saharan Africa

12

There is a paucity of information and even those scarce studies they do not

cover broad perspectives of the situation of SMEs in Sub-Saharan Africa

Therefore this study builds upon the existing limited body of research

regarding how business cultures contribute to the success or failure of small

and medium entrepreneurs In particular it explores the business culture in

Mauritius and its barriers to penetration for new and foreign small and

medium entrepreneurs

14 Purpose Statement

The purpose of this study was to understand the concept on how to penetrate

an international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

15 Aims and Objectives

To investigate the challenges of national cultural differences in

business in Mauritius

To investigate how to penetrate the business environment for a new

and or foreign business culture especially in Mauritius

To investigate business opportunities for SMEs in Mauritius and how

these can benefit the locals

13

16 Research Question

How can Small and Medium Enterprises penetrate the business culture in

Mauritius

These sub-questions all pertain to SMEs business

o 161 SUB-QUESTIONS

What kind of businesses are operating in Mauritius now

What are their business strategies (marketing brands) etc

What are the necessary mechanisms for establishing business in

Mauritius

What are the business needs of established and starting businesses

What are the mechanisms for potential growth of local business

What are the challenges for doing business in Mauritius

How much of business behaviour is influenced by the national culture

17 The Significance of the Study

The findings of the current study will increase the understanding of cultural

barriers to market penetration for SMEs in Mauritius The study adds

knowledge to the body of literature in this area focusing at further

improvement of understudying of culture and business issues The

study becomes part of the universitys education development in line with its

obligations to the communities and the country This research problem arose

from an information need of a particular client This research therefore will try

to explore the client‟s information need and probably contribute to the wealth

of knowledge

14

18 Definitions

CULTURE Hofstede (1997) defines culture as ldquothe collective programming of

the mind which distinguishes the members of one group or category of people

from anotherrdquo It is the norms beliefs and values common to a society

Culture is about the way people understand their world and make sense of it

It only when this is taken for granted assumptions are challenged that people

realise that they even exist (Hofstede 1997)

ENTERPRISE An enterprise is considered to be any entity engaged in an

economic activity irrespective of its legal form This includes in particular

self-employed persons and family businesses engaged in craft or other

activities and partnerships or associations regularly engaged in an economic

activity (European Commission 2003)

INTERNATIONAL BUSINESS International business consists of transactions

that are devised and carried out across national borders to satisfy the

objectives of individuals and organizations The Primary Types of International

Business Activities Are Importing and Exporting Direct Foreign Investment

(Govindarajan and Gupta 2001)

GLOBALISATION refers to a bdquogrowing economic interdependence among

countries as reflected in the increased cross-boarder flow of three types of

entities goods and services capital and knowhow‟ (Govindarajan and Gupta

2001 4)

15

SMALL AND MEDIUM INTERPRISES (SME) is made up of enterprises

which employ fewer than 250 persons and which have an annual turnover not

exceeding EUR 50 million andor an annual balance sheet total not

exceeding EUR 43 million (European Commission 2003)

In Mauritius an SME has been redefined taking into account the volume of

investment in equipment which was previously one million up to 10 millions

Mauritian Rupees presently to be classified as a small enterprises and with

less than 50 and 200 employees for small and medium scale respectively

(Stone 1997)

16

CHAPTER TWO

LITERATURE REVIEW

The aim of this chapter is to introduce conceptual themes that are important in

order to understand the role of culture in international business The chapter

discusses the context of relationship between culture and international

business practices in small and medium enterprises (SMEs) and the major

challenges they face in the area of globalisation A model adopted from Putz

(2000) forms a framework for articulating the conceptual role that culture has

in international business using Mauritius as a case study

21 Embracing Cultural change in an era of globalization

A significant theoretical issue for international business is the role of culture in

the whole aspect of information transformation Since the landmark study by

Haire et al (1966) and the publication of Industrialism and Industrial Man by

Kerr et al (1960) researchers have continued to search for similarities in

culturally specific beliefs and attitudes in various aspects of work related

attitudes as well as consumption patterns and other behaviours If cultures of

the various communities of the world are indeed converging (Heuer et al

1999) International Business (IB) related practices would likely become

increasingly similar For example standard culture-free business practices

would emerge and inefficiencies and complexities associated with divergent

beliefs and practices in the past era may disappear (Heuer et al 1999)

17

Studies elsewhere suggest that culture gets affected by globalization practices

in the current 21st century Globalization has seen flows of information

technology money and people and is conducted via international

government organizations such as the African Union the North American

Free Trade Agreement (NAFTA) and the European Community global

organizations such as the International Organization for Standardization

(ISO) multinational companies (MNCs) Also includes cross-boarder alliances

in the form of joint ventures international mergers and acquisitions These

interrelationships have enhanced participation in the world economy and

have become a key to domestic economic growth and prosperity (Drucker

1995 153)

Literature suggests that because globalization tends to redistribute economic

rewards in a non-uniform pattern a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) Strong opposition to

globalization usually originates from developing countries that have been

affected by the destabilizing effects of globalisation However in recent years

there have been heated debates in Western economies triggered by

significant loss of professional jobs as a result of offshoring to low wage

countries (Schaeffer 2003)

Workers in manufacturing and farming in advanced economies are becoming

increasingly wary of globalization as their income continues to decline

18

significantly In parallel to the angry protests against globalization the flow of

goods services and investments across national boarders has continued to

fall after the rapid gains of the 1990s The creation of regional trade blocs

such as NAFTA the European Union and the Association of Southeast Asian

Nations have stimulated discussions about creating other trade zones

involving countries in South Asia Africa and other parts of the world

Although it is often assumed that countries belonging to the World Trade

Organization (WTO) have embraced globalization the fact is that the world is

only partially globalized at best (Schaeffer 2003)

Many parts of Central Asia and Eastern Europe including the former

republics of the Soviet Union parts of Latin America Africa and parts of

South Asia have raised heightened scepticism about globalization (Greider

1997) In fact less than 10 of the world‟s population are fully globalized (ie

being active participants in the consumption of global products and services)

(Schaeffer 2003)

According to Guile`n (2001) these trends might indicate that globalization is

being impeded by tendencies towards country-specific modes of economic

development making the convergence of IB-related values and practices

difficult to achieve Hofstede (1980)‟s favourite definition of f ldquoculturerdquo is

precisely that its essence is ldquocollective mental programmingrdquo it is that part of

peoples conditioning that they share with other members of their nation

region or group but not with members of other nations regions or groups

Hofstede (2001) asserts that these mental programs of people around the

19

world do not change rapidly but remain rather consistent over time His

findings tend to suggest that cultural shifts are relative as opposed to

absolute Although clusters of some countries in given geographical locales

(eg Argentina Brazil Chile) might indicate significant culture shifts towards

embracing Anglo values the changes do not diminish the absolute differences

between such countries and those of the Anglo countries (ie US Canada

UK)

According to Hofstede (1980) Examples of differences in mental

programming between members of different nations can be observed all

around us One source of difference is of course language and all that

comes with it but there is much more In Europe British people will form a

neat queue whenever they have to wait not so the French Dutch people will

as a rule greet strangers when they enter a small closed space like a railway

compartment doctor‟s waiting room or lift not so the Belgians Austrians will

wait at a red pedestrian traffic light even when there is no traffic not so with

the Dutch Swiss tend to become very angry when somebody-say a foreigner

makes a mistake in traffic not so with the Swedes All these are part of an

invisible set of mental programs which belongs to these countries‟ national

cultures Such cultural programs are difficult to change unless detaches the

individual from his or her culture Within a nation or a part of it culture

changes only slowly (Hofstede 1980)

20

This is the more so because what is in the minds of the people has also

become crystallized in the institutions namely government legal systems

educational systems industrial relations systems family structures religious

organizations sports clubs settlement patterns literature architecture and

even in scientific theories All these reflect traditions and common ways of

thinking which are rooted in the common culture but may be different for other

cultures (Hofstede 1980)

22 The dynamics of Culture as a Multi-level Multi- layer construct

Multi-level approaches of viewing culture as a multi-level construct that

consists of various levels nested within each other from the most macro level

of a global culture through national cultures organisational cultures group

cultures and cultural values represented the self aspect of the individual See

figure 3

21

Figure 3 The dynamic of top-down-bottom up process across levels of

culture (Source Schein 1992)

The model proposes that culture as multi-layer construct exist at all levels

from global to the individual Changes that take place at the external layer of

behaviour are most likely shared by individuals who belong to the same

cultural background level hence characterising the aggregated unit (Schein

1992)

Top-

Down

Individual

Behaviour

Values

Assumptions

Global Culture

National Culture

Organizational Culture

Group Culture

Bottom

Up

22

Below the global level are nested organizational layers or networks at the

national level with their local cultures varying from one nation or network to

another Further down are local organizations and although all of them share

some common values of their national culture they vary in their local

organizational cultures which are also shaped by the type of industry that

they represent the type of ownership the values of the founders etc Within

each organization are sub-units and groups that share common national and

organizational cultures but differ from each other in their unit culture based on

differences in functions of their leaders‟ values and the professional and

educational level of their members At the bottom of this structure are

individuals who through the process of socialization acquire the cultural values

transmitted to them from higher levels of culture Individuals who belong to the

same group share the same values that differentiate them from other groups

and create a group-level culture through a bottom-up process of aggregation

of shared values (Schein 1992)

Both top-down and bottom-up processes reflect the dynamic nature of culture

and explain how culture at different levels is being shaped and reshaped by

changes that occur at other levels either above it through top-down

processes or below it through bottom-up processes(Schein 1992) Similarly

changes at each level affect lower levels through a top-down process and

upper levels through a bottom-up process of aggregation The changes in

national cultures observed by Inglehart and Baker (2000) could serve as an

23

example for top-down effects of economic growth enhanced by globalization

on a cultural shift from traditional values to modernization

In view of the complexity of the organizational structures specific

organizational structures that have global character need to be established so

as to adopt common rules and procedures in order to have a common

bdquolanguage‟ for communicating across cultural borders (Kostova 1999 Kostova

and Roth 2003 Gupta and Govindarajan 2000)

Given the dominance of Western Multi National Companies (MNCs) the

values that dominate the global context are often based on a free market

economy democracy acceptance and tolerance of diversity respect of

freedom of choice individual rights and openness to change (Gupta and

Govindarajan 2000) The multi-level structure explains how a lower-level

culture is being transformed by top-down effects and that the cultural layer

that changes first is the most external layer of behaviour In the long run

bottom-up processes of shared behaviours and norms would affect the local

organizational culture as well (Schein 1992)

23 International Business and Culture

Knowledge of cultural differences is one of the key components in

international business practices and success Improving levels of cultural

awareness can help companies build international competencies and enable

individuals to become more globally sensitive (Hofstede 2003) Indeed

cultural differences contribute towards different ways people behave in

24

business Research in the field of international management underscores that

the attributes of cultural knowledge used by a firm play an important role in the

firms expansion For example Martin and Salomon (2003) found that cultural

orientation in entrepreneurial action is a central theme and can serve as a

starting point for immigrant business

ldquoUnderstanding the culture and the conceptualisation of culture in conjunction with entrepreneurial action is a critical issue when doing business in an international environment Contributions of economic geography inspired by the cultural turn which shows alternative ways of thinking about the connection between culture and economy by using a new understanding of culture are also critical (pg 198)rdquo

The statement underscores the important of understanding the culture of a

society before attempting to do business there otherwise the company runs a

risk of going out of business The ways in which different groups of people

interpret their environment and organise their activities is based the on the

specific cultural values and assumptions Certain values often thought to be

universal really do differ from culture to culture What constitutes an ethical

business practice is not the same everywhere This can be an enormously

difficult area in managing business across cultures (Straub et al 2002)

Although one may claim cultural differences to be going away they are

actually being absorbed in the business practices This makes it more critical

than ever to try to understand different cultures and their influence on the

ways people do business and view the world The costs of not understanding

are getting greater than ever The essence of culture is not what is visible on

the surface It is the shared views about what people understand and interpret

25

the world These cultural differences are crucial influences on interactions

between people working and managing across culture (Gertler 1997)

The social behaviour of a society is embedded in a particular context and is

connected to other deeply held values and beliefs (Weisinger and Trauth

2003) This means that the stakes are high for mismanaging cultural

differences Ignoring or mishandling differences can result in an inability to

retain and motivate employees a misreading of the potential of cross-border

alliances marketing and advertising blunders and failure to build sustainable

sources for competitive advantage Mismanaging cultural differences can

render otherwise successful managers and organisations ineffective and

frustrated when working across cultures (Weisinger and Trauth 2003)

24 Putz Model For Immigrant Business and Culture

Literature in the field of Immigrant Business differentiates mainly between two

basic approaches each with a different emphasis which are combined to

explain entrepreneurial action of immigrants (Putz 2000) The first approach

emphasis the bdquoopportunities‟ offered by the host country including access to

the market and job market conditions The second approach focuses on the

bdquoresources‟ of migrant groups from whom the concept of culture becomes

essential (see Figure 1 below)The Putz (2000) cultural model below is a

summary of explanatory approaches following the assumption that self

employment of certain groups is the result of their specific cultural

predisposition which favours business activity

According to Putz‟s (2000) view of cultural model the bdquoopportunities‟

approach which refers to market possibilities as an explanation for self

26

employment of immigrants assume that there are certain market segments

with favourable development perspectives especially for immigrant groups

Here two factors receive special attention which are niche markets and legal

and institutional frameworks Niche markets make the establishing of business

by immigrants easier because their needs for consumer goods create specific

demand Legal and institutional frameworks gain awareness in international

comparative studies through restrictions specified by a country regarding

business permits and regulations these frameworks influence both the extend

and the sectored structure of the bdquoimmigrant business‟ (Putz 2000)

According to Putz (2000) the observation that most immigrant groups show a

higher level of self employment rate than others often forms the background

explanation which focus on opportunities created by the host society

Resource models stress the shared characteristics of migrants of same origin

Resources models explain that certain groups have specific cultural

resources which make it easier for members of that group to become self

employed therefore one can distinguish between the cultural traditions and

socialethnic networks ( Putz 2000)

27

Figure 4 Dominating models concept of bdquoImmigrant Business‟ (Source Putz

2000)

OPPORTUNITIES

Market Access

Possibilities

Market Conditions

Niche Markets

lsquoOpenrsquo Markets

Job Market

Conditions

Access

Vertical Mobility

Legal and Institutional

Frameworks

lsquoEthnicrsquo

Business

RESOURCES

lsquoClass Resourcesrsquo lsquoCultural Resourcesrsquo

Cultural

Traditions

Social lsquoEthnicrsquo

Resources

28

When successfully managed differences in culture can lead to innovative

business practices faster and better learning within the organisation and

sustainable sources of competitive advantage (Sondergaard and Hofstede‟s

1994) In relation to that the current study argues that managers need to

study and understand the culture and the niche market before investing This

assumption has been raised as a result of the previously reported experiences

and research findings already reported so far It is therefore critically important

to understand that every society has got its own way of behaving which needs

to be understood if the business is to succeed Operating companies need to

understand what their business means to the people of the given community

and their culture

Several studies of international business have indicated that

internationalization of the firms is a process in which the firms gradually

increase their international involvement(Johanson amp Wiedersheiml 1995

Gibson 1999 Chui et al 2002 ) It seems reasonable to assume that

within the frame of economic and business factors the characteristics of this

process influence the pattern and pace of internationalization of firms Figure

5 below shows a model of the internationalization process of the firm that

focuses on the development of the individual firm and particularly on its

gradual acquisition integration and use of knowledge about foreign markets

and operations and on its successively increasing commitment to foreign

markets The basic assumptions of the model are that lack of such knowledge

is an important obstacle to the development of international operations and

that the necessary knowledge can be acquired mainly through operations

abroad (Johanson and Wiedersheiml1995)

29

FIGURE 5 The Basic Mechanism of Internalisation- State and Change Aspects

Figure 5 Basic Mechanism of Internalisation (Source Johanson amp

Wiedersheiml 1995)

Market knowledge and market commitment are assumed to affect both

commitment decisions and the way current activities are performed These in

turn change knowledge and commitment ( Aharoni 1966) In the model it is

assumed that the firm strives to increase its long-term profit which is

assumed to be equivalent to growth (Williamson 1966) The firm is also

striving to keep risk-taking at a low level These strivings are assumed to

characterize decision-making on all levels of the firm Given these premises

and the state of the economic and business factors which constitute the frame

in which a decision is taken the model assumes that the state of

internationalization affects perceived opportunities and risks which in turn

influence commitment decisions and current activities (Johanson amp

Wiedersheiml 1995)

Market

Knowledge

Market

Commitment

Commitment

Decisions

Current

Activities

30

2 5 The Role Of Information Communication Technologies

Hofstede (2001) observed that not only will cultural diversity among countries

persist but also new technologies might even intensify the cultural differences

between and within countries Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

Information communication technologies (ICTs) enable users to access varied

amounts of information globally however it does not necessarily increase

their capacity to absorb the information at the same rate as the information is

disseminated or diffused (Bhagat et al 2002) In addition information and

knowledge are interpreted through cultural lenses and the transfer or diffusion

of organizational knowledge is not easy to accomplish across cultural

boundaries (Bhagat et al 2002)

Ethnic groups around the world observe the lifestyles and cultural values of

other countries and some are interested in adopting part of the lifestyle and

values but others reject it completely (Kirkman and Shapiro 2000) The

effects of new technologies on improving efficiencies of multinational and

global corporations are well known but it is not known how these new

technologies especially computer-mediated communication and the Internet

31

might create significant shifts in the cultural patterns of different ethnic groups

(Kirkman and Shapiro 2000) or on their ways of doing business

In essence there in need to explore how the spread of ICTs is affecting the

progress of globalization in different parts of the world by incorporating the

role of cultural syndromes organizational cultures and other processes

which has recently been attempted by scholars such as Bhagat et al (2003)

and Gibson and Cohen (2003)

Information and Communications Technology (ICT) has become a catchword

with different interpretations and viewpoints even among experts As the

name suggests ICT encompasses all the technology that facilitates the

processing transfer and exchange of information and communication

services In principle ICTs have always been available since the advent of the

printing press The only difference is that from the late twentieth century rapid

advances in technology changed the traditional ways in which information was

processed communications conducted and services available (Adu 2002)

These technological advances have changed business operations and the

way people communicate They have introduced new efficiencies in old

services as well as numerous new ones One could even imagine going as far

as replacing the term Post-industrial Society with ldquoInformation Society that

is a society where the ability to access search use create and exchange

information is the key for individual and collective well-being (Kaplan 2001)

32

Globally entrepreneurship is considered as the engine of economic

development The SME sector has the potential to address socio-economic

challenges facing both developing and developed countries Without small

business development it is argued that economies stagnate unemployment

levels continue to rise and the general standard of living deteriorates

Information and communications technology (ICT) has been identified as a

major area of need to develop the SME sector in areas of information

provision access to national and international markets and other areas of

business development and support ( Ferrand and Havers 1999)

ICTs enable entrepreneurs to manage their businesses efficiently and thus

enhancing their competitiveness in the global market They can increase their

geographic reach improve efficiency in procurement and production and

improve customer communications and management For these reasons the

need to encourage and accelerate the uptake and optimal application of ICTs

by SMEs in different sectors of the economy cannot be overemphasized

(Ramsay et al 2003) The ICT sector has the potential to absorb prospective

entrepreneurs considering various business opportunities offered by the

sector Some of the business opportunities available within the sector relate to

systems integration application development database administration web

design and internet service provision The sector is also seen as an area with

major opportunities for the historically disadvantaged sectors of the

population It therefore becomes imperative for government to provide

mechanisms to accelerate the entry of SMMEs into the ICT sector (ILO 2001)

33

26 Cross Culture and International Business

Cross-cultural management advice rests on several assumptions in the

tradition of Hofstede (1997) that a) that national culture is comprised of norms

and values that can be readily identified and addressed b) that these norms

values and patterns of behaviour are stable and change at an extremely slow

pace and c) that national culture predominates over organizational culture

epistemic culture gender or other determinants of attitudes and behaviour

According to Hosftede (1997) national culture is comprised of norms and

values that can be readily identified and addressed

Organisational culture (common values and attitudes) affects organizational

success and innovation develops over time and may be difficult to change

ldquoThere is a relationship between an organization‟s culture and its

performance The pervasive nature of organizational culture means that if

change is to be brought about successfully this is likely to involve changes to

culturerdquo (Mullins 1999)

An alternative view sees culture as more complex context-specific and

dynamic For example Weisinger and Trauth (2003) examined the interaction

of national cultures the IT industry culture and a particular firm‟s

organizational culture They observed that the resulting situated culture ldquois

fluid contextually dependent and created by actors within a group who may

hold conflicting assumptions and world viewsrdquo In other words culture is as

what it is because of what it does This means that management must ensure

34

that key capabilities for example marketing analytics or process controls are

developed and nurtured across the organization

Successful global managers recognize that they cannot respond to every

unique opportunity that local settings offer Thus there is an inherent tension

in cultural sensitivity a management team which is ldquotoo sensitiverdquo to cultural

and structural features exposes the organization to the risks that come with a

lack of focus and coherence while managers who do not take cultural and

structural features into account expose the organization to the risks that come

with organizational rigidity (Myres and Tan 2002)

According to Mistry (1999) entrepreneurial networks and clusters in sub-

Saharan Africa have not generally produced the kind of strong transnational

links that characterize Asia‟s flourishing pattern of industrial diffusion The

author states that the reasons for this are complex differences in geography

different models provided by leading countries in the neighbourhood and

policies adopted by governments in the respective regions Chinese business

networks are responsible for some of the information ideas and capital that

helped launch the small Indian Ocean nation of Mauritius as an important

centre for export-oriented industry The Chinese networks in Mauritius also

continue to facilitate a role that Mauritius first began to play in the eighteenth

century they serve as a gateway for overseas Chinese entrepreneurs

interested in investing both in Mauritius and elsewhere in Africa (Mistry 1999)

35

27 Investing in Mauritius

There are a lot of advantages in investing in Mauritius The economy of the

country is stable and the graph of the economy and business is one the rise

for a considerable period of time The Mauritius government has undertaken a

sequence of strategic measures to support its course into offshore banking

manufacturing and financial services communication technology and tourism

keeping in mind the significance of foreign investment as a basis of

nourishment of the financial development (Dabee and Greenaway 2001)

According to Dabee and Greenaway (2001) tthere are various factors that

influence financiers to invest in Mauritius like accessibility of skilled labor

political constancy and venture-friendly institutions and regulations One of

the major factors for the development of Mauritius is the Foreign Direct

Investment (FDI) The government of Mauritius has given all the necessary

support to create the most favorable investment setting by the following steps

Building modern infrastructure

Endorsing suitable legislations

Commencing packages of investment inducements

Investing in human capital

Some of the advantages of investing in Mauritius are as follows

High-quality infrastructure with superb transportation

Democracy and a steady government

Free market financial system fastened on export slanting activities

Excellent system of sea and air transport

36

High standard of living good international schools

A highly educated bilingual and responsive work force

Knowledgeable financial segment providing outstanding services

Constructive market contact and good inducements ( IBP 2002)

Mauritius has various sectors where investment can be made like Information

and Communication Technology and manufacturing For doing business in

Mauritius registered trademark is required The trade marks for business are

issued by the registered Patents and Trademarks sector of Ministry of Foreign

Affairs International Trade and Cooperation In the country of Mauritius a

foreigner is eligible to hold 100 shares In this case one of the directors of

the company has to inhabit in Mauritius and the foreign individual has to

obtain a sanction from the Office of Prime Minister (IBP 2002)

In Mauritius the laws concerning income tax is based on the English law of

income tax The companies in Mauritius are lawfully accountable to pay out

income tax on their profits at an even rate of 25 A company which is

included in the country or has its scheming benefit in the country is measured

for tax reasons to be an occupant corporation To the Mauritius companies

various types of tax incentives are granted The companies that hold

certificate for Tax inducement are responsible to tax at an abridged rate of

15 while the scheduled companies are accountable to pay tax at the rate of

25 ( Dabee and Grrenaway 2001)

37

CHAPTER THREE

METHODOLOGY

Having looked at culture to some depth this chapter explains the methods

used in carrying out the study The study used mixed method approach to

allow for data corroboration and dynamism since the subject in question

needed dynamism and sensitivity in approach

This research mixed both qualitative and quantitative approaches to try and

get best possible research by combining both features because they

complement each other Quantitative data techniques condense data in order

to get a bigger picture whereas qualitative techniques are data enhancers

making it possible to see issues more clearly (Dawson 2002 Neuman 2000)

Attempt was made to keep in line with recommendation made in the Leeds

Declaration proposition number 6 which calls for the application of multiple

methods and perspectives to try and understand social and cultural issues

(Hunter and Lang 1993) Mixing qualitative and quantitative methods also

called positivist and interpretive respectively (Gilbert 2001 and Bowling 2002)

is effective in a complex issue study such as this one because they highlight

different perspectives of the same problem in this case - the public in parallel

with the individual level(Gilbert 2001) This is because quantitative methods

adopt a numerical approach to data collection and analysis to provide macro

level perspective whereas qualitative methods provide micro level perspective

through collecting data from individuals (Ibid)

38

There was also use of impersonal (public) documentation using official

records which were more library based research (Grbich 1999) on top of

theory generating field based methods (Ibid) Many researchers (Bowling

2002 Neuman 2000 Grbich 1999 Denscombe 2003 and Gilbert 2001)

concur that neither of the methods is superior to the other but just different

each having its strengths and weaknesses (Dawson 2002)

The study sought to explore the attitudes behaviour subjective meanings and

experiences of the participants making qualitative approaches best suited

because they emphasize the importance of context (Neuman 2000) However

to generate objective and factual (Maynard and Purvis 1994) statistical

figures quantitative research was more suitable Hence mixing of methods

(Dawson 2002 Denscombe 2003) to counteract weaknesses in both

approaches to give breadth and width to the study (Maynard and Purvis

1994) The flexibility of qualitative research allowed for re-focusing and

refinement of the tool dependent on participants‟ reactions throughout

(Neuman 2000) to pick up any emerging evidence thus applying the

grounded theory approach (Dawson 2002)

39

31 Research Setting

Mauritius is a volcanic island of lagoons and palm-fringed beaches in the

Indian Ocean Southern Africa east of Madagascar with a population of

about 12 million has a reputation for stability and racial harmony among its

mixed population of Asians Europeans and Africans The island has

maintained one of the developing worlds most successful democracies and

has enjoyed years of constitutional order since independence in1968 Over

the past three and half decades the country has been transformed from one

of the poorest in the world to a middle income country with per capita Gross

Domestic Product US $7000 (World Bank 2006) It has preserved its image

as one of Africas few social and economic success countries that mainly

depends on sugar and clothing export and a centre for upmarket tourism But

Mauritian exports have been hit by strong competition from low-cost textile

producers and the loss of sugar subsidies from Europe Consequently

attention has turned to diversification in line with global trends

To this end SMEs have been identified as important instruments to achieve

economic diversification Today the government vigorously supports SMEs

through a range of strategies eg the creation of a business friendly climate

via import liberalisation tax reforms and the launch of the SME Partnership

fund which gives subsidized loans to aspirant SME owners and makes the

availability of finance and facilitating access in particular for those enterprises

that have viable projects but are short of equity The Small Enterprises amp

Handicraft Development Authority (SEHDA) was created following the merger

of the Small amp Medium industries Development Organisation (SMIDO) and the

National Handicraft Promotion Agency (NHPA) The aim of the merger is to

40

rationalize and optimize the use of resources dedicated to the small business

sector in Mauritius

Various cultures and traditions flourish in peace though Mauritian Creoles

descendants of African slaves who make up a third of the population live in

poverty and complain of discrimination Mauritius was uninhabited when the

Dutch took possession in 1598 Abandoned in 1710 it was taken over by the

French in 1715 and seized by the British in 1810 The culture of the country

reflects its diverse ethnic composition There are many religious festivals

some important ones being (in random order) Divali (the hindu festival of

lights in October) Christmas Cavadee (a penitence festival of the south

Indian tradition of hinduism in January) Eid ul Fitr (celebrating the end of the

period of fasting in Islam As the Islamic calendar does not correspond to the

Gregorian calendar the date of its celebration in the year tends to vary In

2003 it was celebrated in November) With such a strong history diverse

culture and such a promising economy painted above makes Mauritius a rich

setting to investigate culture and small medium business entrepreneurship

32 Methods

As justified already this study applied method mix to exploit the benefits of all

methods used while minimising the effects of their weaknesses The obvious

benefit of method mix is that it involves more data which is likely to improve

the quality of research (Denscombe 2003) and that is what the researcher

sought to achieve In deciding which method to use it was acknowledged that

the chosen methods were not superior in any way but more suited to the study

41

circumstances based on the premise of ldquohorses for courses (Denscombe

2003 page 83)

A Questionnaire used in the online web survey allowed for collection of

data from large numbers of participants economically since the project had

financial and time limitations (Ibid) The other advantage of survey exploited is

generation of quantitative data However weaknesses of the method

(empiricism lack of depth and accuracy of responses) were a challenge The

questionnaire was open ended and was completed by the participant in the

absence of the researcher Any questions arising from the participant not

understanding or misinterpreting the question where not taken care of Focus

groups were used to gain depth into some of the emerging issues from

questionnaires to gain insights into the issues surrounding widow inheritance

and to validate some of the data (Denscombe 2003) Telephone and face to

face interviews were used to gather to gain in-depth information on the

issues

All accessible literature on culture and investment in Mauritius as well as

other parts of Africa was reviewed to get insight into any related work to

identify key issues and current knowledge gap so as to sign post this study for

any audience (Ibid)

42

33 Research Participants and sampling

It was difficult to get exact demographic data for each sector Consequently it

was not possible to use any scientific sampling techniques The study

therefore used non-probability sampling (Neuman 2002 Bowling 2002

Denscombe 2003) targeting urban based population

The sample baseline characteristics were

SME managers from aged 18 years and above and over 65 was the

limit Any religion faith Any socio-economic background and residents

of Port Luis and surrounding areas

To sample for quantitative data purposive and snowballing sampling

techniques were used because it was not possible to apply any statistical

formula in getting the samples since there was no single list of SME managers

and other stakeholders to use with any form of probability sampling

Participants were snowballed from one sector to another until the whole

sectors were covered For the focus groups homogenous and critical case

(Grbich 1999) sampling was used to get particular sub group to provide

details In this case to get government officials and the private sector who

were strong enough to talk about their experiences

A total of 161 participants were reached from all the sectors These included

SME manager government officials and the private sector The researcher

wishes to point out that these numbers were not conclusive The numbers

could be much higher because in case the researcher phoned the participants

they were not available to take the call there was no time to go back to

43

ascertain the details Those who were not willing to take part in the study were

also excluded from the above figures For the focus groups discussions 5

government officials and the private widows were invited and used Skype

technology to do a conference

The times when the participants were contacted met were entirely dependent

on participant availability and other events at the time (Gilbert 2001) It varied

between 800 am and 700 pm in the evening because of the time differences

UK and Mauritius time Care was taken to avoid compromising times such as

late in the evening or culturally sensitive days such as weekends when people

were engaged in funerals and church services in this case

The participants showed weariness towards the study because as they put it

ldquoa lot of people come along claiming to collect data to help but never show up

againrdquo

34 Data collection Instruments

The researcher developed an online quantitative data collection questionnaire

(web survey form) which was posted on the university web server with help of

the department technicians A multiple recipient list was created from the

details in the SEHDA website and was randomly sent to the recipients These

only included the SME managers from the seven sectors About 20 contacts

were selected from each sector which made a total of 140 participants

Telephone interviews were made to about 17 government officials and the

private sector who were later divide n to focus groups and a teleconferencing

44

was organised on Skype Face to face interviews were done with government

officials from the Mauritian High Commission in the UK

Apart from the questionnaire an Olympus VN 2100 PC Digital Voice Recorder

was also used during the focus group discussion with the permission of

participants also on telephone interviews and face to face interviews This

was tested set and correctly positioned by the telephone speaker before the

session began to ensure proper functioning It was fitted with a mini

microphone to improve recording quality The digital voice recorder small in

size (only 68 grams in weight) proved user friendly because it was not

intruding too much into the face of participants as opposed to older recording

devices There was a pair of AAA batteries on standby in case the batteries in

use ran flat during the session

35 Ethical Considerations

This study involved very little of sensitive issues but it strived very much to

adhere to the fundamental principles of Human Research Ethics of Respect

for Persons Beneficence and Justice The researcher ensured autonomy self

determination and protection of vulnerable persons through informed consent

participation confidentiality and thorough explanation of what the research

was all about to those with limited knowledge and education Any risk that

might have resulted from the study was minimised as much as practically

possible and the researcher took full responsibility for the protection of

participants There was no form of discrimination other than on participant

baseline characteristics

45

The study also upheld the six key ethical research principles as stipulated by

ESRC - UK (ESRC 2005) To ensure anonymity pseudonyms were used for

participants The information gathered was safely protected through password

use on the computer system and only the researcher had access to the

information The researcher was responsible for storage and destruction of

any information no longer needed such as audio files after transcription

Research respondents participated in a voluntary way free from any coercion

and free to withdraw at any point should they felt uncomfortable

The first ethical committee whose approval was sought was the University of

Sheffield Ethical committee after which the researcher sought ethical approval

from Mauritian authorities through the relevant ministries It was not straight

forward getting ethical approvals in Mauritian but ultimately the ministry of

SMEs approval was obtained

36 Procedure

After all the necessary approvals were obtained the researcher wrote an

explanatory letter (Grbich 1999) or bdquoparticipant‟s information sheet‟ (appendix

5) which included information on informed consent (Denscombe 2003)

After piloting the tools the researcher started by making calls to make

appointment for interviews As the quantitative data collection went on

recruitment of participants to take part in qualitative aspect was done

simultaneously due to time constraints The researcher used individual

judgement to asses those participants who would be courageous enough to

respond to the questionnaire online and to the interviews The managing

46

director for RCBusiness Support Ltd also provided a number of potential

respondents who were used at the initial stages of the study Each interview

session lasted averagely 50 minutes The researcher went to organise the

teleconferencing for the focus group on Skype which also lasted for average

50 minutes

37 Data Analysis

Since the distinction between quantitative and qualitative research is not

watertight (Denscombe 2003) data analysis embraced both because they

have similarities and differences (Neuman 2000) There was analysis of

words and numbers thus holistic versus specific focus (Denscombe 2003)

The analysis adopted a five stages approach (Denscombe 2007) The first

stage was data preparation followed by data exploration analysis

presentation and finally validation

Though some researchers champion for advanced inferential statistics

(Denscombe 2007) the researcher opted for descriptive statistics for the

quantitative data analysis because they still remain effective ways of data

analysis and presentation (ibid) The research data involved nominal as well

as discrete and continuous data which could effectively be analysed using the

chosen method The data was grouped frequencies were described and

finally any linkages were identified The end product of the analysis process

is presented in the results section in various formats Basic statistical

techniques were used to give the data additional credibility in terms of

interpretations of the findings (Denscombe 2007)

47

For the qualitative data the first thing was to back up the original voice

recorded focus group discussion into a password protected lap top This

ensured not only the security of the data but also a back up in case of data

loss The researcher then listened to the recording several times to familiarise

himself with the data after which transcription took place After that the data

was interpreted and categories themes were identified since thematic

analysis was employed The Putz (2000) model was used as a guide to

finding themes The findings are presented in the results section

38 Planned programme of dissemination

The study findings were disseminated to all relevant stakeholders in print

format including the university as part of the postgraduate degree requirement

in academically fulfilling format Two copies of the report were sent to the

Ministry of SMEs in Mauritius and two copies to the Board of Investment of

Mauritius in the UK as part of the requirements of ethical approval and

research permission granted by the ministry

Finally it was hoped that the report would meet publication requirements so

that it could get a wider audience through a reputable journal

48

39 Time scale

The study was anticipated to take the following breakdown from the time all

ethical approvals and consent were obtained

Table 1 Table showing the study time scale

Stage Time allocation Action item Accountable person

I Weeks 1 - 3 Research set up Sampling and

access to participant negotiations

Angelinah Boniface

II Weeks 4 - 12 Data collection and Analysis Angelinah Boniface

III Weeks 12 - 16 Analysis Report writing and

dissemination

Angelinah Boniface

310 Limitations and Delimitations

This study was not fully funded as such high telephone costs travelling

affected the exercise Only business people in Mauritius both men and women

were interviewed The study covered both local and foreign investors

Participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

49

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

A major limitation is a low response rate of the questionnaire and therefore a

representative sample of the SME population was not achieved Thus any

conclusions made from the analysis of the collected data cannot be

generalized to the broader SME population Bias may have been inadvertently

introduced during interviewing caused from such things as leading questions

50

CHAPTER 4

RESEARCH FINDINGS AND DISCUSSION This chapter aims to discus the research findings from the study The chapter

is divided into two sections the first part presents and discusses the

quantitative data and the second part discusses qualitative It is therefore

worth mentioning that the Putz (2000) model was used to guide the

qualitative data analysis and some of the themes were taken from the model

and some were generated from the research findings It must be noted that

any findings uncovered from this study cannot be generalized to the broad

public domain regarding SMEs

Section A of the questionnaire and the interview guide included questions that

collected background information on the SME managers and the responding

firms These data constitute the substantive material for analysis in the

ensuing sections The tables below depict the socio demographic

characteristics of the survey participants age group gender educational level

and experience as ownermanager In the following sections there aspects

are discussed

51

41 RESPONDENTS RATE ACCORDING TO SECTORS

TABLE 2

SECTOR SEHDAS SURVEY SENT

SURVEY RECEIVED

RESPONSE RATE

Leather and Garments

1678 20 12 60

Wood and Furniture

2196 20 11 55

Paper Products and Printing

1541 20 9 45

Chemical Rubber and Plastic

1376 20 11 55

Pottery and Ceramic

793 20

17 85

Jewellery and Related Items

1674 20 13 65

Fabricated Metal Products

1267 20 14 70

TOTAL 7 140 101 72

Table 2 shows the response rates from various sectors of SME in Mauritius

which were targeted by the online survey As the table indicates pottery and

ceramic sub sector had the highest response rate (85) with paper products

sector giving the least response rate (45) Overall 72 response rate from

all the targeted sectors was satisfactory It is worth mentioning that the total

number of participants adds to 140 since this question was only directed to

sectors not to other stakeholder in the research sample

52

42 DEMOGRAPHIC PROFILE PARTICIPANTS

TABLE 3 AGE GROUP AS PER PARTICPANT

AGE GROUP FREQUENCY PERCENTAGE

-25 7 43

26-35 34 211

36-45 53 329

46-55 35 217

56-65 22 137

gt 65 11 63

TOTAL 161 100

Evidence from most of entrepreneurial literature suggests that self-

employment becomes an increasingly attractive option as one nears middle

ages As can be seen in table 3 respondent‟s ages ranged from 25 to 65 and

the largest proportion (329) of the participants was in the age range of 36ndash

45 Additionally participants were biased towards the age ranges of between

36 and 65 and away from the under 25 and over 65

TABLE 4 GENDER PROFILE AS PER PARTICIPANT

GENDER

Male 116 720

Female 45 280

TOTAL 161 100

53

In relation to gender the research sample was predominantly male (72) a

striking although unsurprising demographic characteristic that reflects the

composition of the larger business sector in the country as a whole

Consequently only (28) were females This is clearly illustrated in table 4

above

TABLE 5 EDUCATION PROFILE AS PER PARTICIPANT

EDUCATIONAL LEVEL

Primary 8 50

Junior-level 29 180

O-level 78 484

Diploma 34 211

Higher Degrees 12 75

TOTAL 161 100

As evident from table 5 the educational levels attained by respondents varied

considerably as follows Primary School Certificate (8 or 5) Junior

Certificate (29 or 180) Ordinary Level (78 or 484) Diploma (34 or

211) and higher Degrees (12 or 75 ) On the whole though the data

suggest that the educational levels of our respondents are low the largest

proportion (398) possessing an Ordinary Level certificate

54

TABLE 6 YEARS EMPLOYED AS CEO AS PER PARTICIPANT

Years Of Employed as CEO

0-3 44 273

4-7 88 546

8-14 15 94

15-19 11 68

Over 20years 3 19

TOTAL 161 100

Not surprisingly table 6 shows that most of the responding executives did not

have education that emphasized a business curriculum This can be

understood with respect to the Mauritian educational curriculum which largely

overlooked business subjects until very recently

The research sample participants had been employed at their current firms on

average 1467 years and had an average of 12 years experience in the

manufacturing industry Four predominant job titles used by the senior

executives emerged from the questionnaireinterview responses Managing

Director (38) Director (26) Manager (20) and Chief Executive Officer

(16)

55

43 CHARACTERISTICS OF RESPONDING FIRMS

This section presents the descriptive statistics of the responding firms The

description focuses on age of the firm employment size firm revenues and

firm ownership

TABLE 7 COMPANY AGE PROFILE

Age of Company Frequency Percentage

1- 3 years 44 314

4- 6 years 68 486

7-10 years 19 136

11-15 years 7 50

Above 15 years 2 14

TOTAL 140 100

Table 7 displays the statistical data Of the firms responding the largest

proportion (486) was 4 to 6 years old Overall the sample reveals a skewed

distribution towards the ranges between 4 and 15 Also it is interesting to note

that 915 of the responding firms are mature that is beyond the start-up

phase

TABLE 8 EMPLOYEE PROFILE AS PER PARTICIPANT

Number of Employees

50-99 101 721

100-200 39 279

TOTAL 140 100

56

Unsurprisingly the vast majority of the responding businesses had fewer than

100 employees as depicted n table 8 with the largest proportion (701) in

the 50ndash99 employee categories The study found out that most small

companies would opt to have family and relatives as employees to minimise

costs Only 32 average of the firms were medium-size The preponderance

of small firms in the sample mirrors a more general pattern of firm distribution

in the country where medium and large firms are a conspicuous small

minority

TABLE 9 ANNUAL SALES AS PER COMPANY

Annual Sales

Less than R100 000 88 629

R101 000- R250 000 36 257

R251 000- R15 million 11 79

Above 15 million 5 35

Total 140 1000

As shown in table 9 the largest proportion of responding firms 88or 629

achieved a turnover below R10000000Only scant 11 or 79 posted annual

revenue in excess of R15 million

57

TABLE 10 OWNERSHIP AS PER PARTICIPANT

Ownership

Wholly Citizen 76 550

Joint Venture 42 293

Foreign Owned 22 157

TOTAL 140 100

Regarding ownership table 10 shows that an overwhelming majority or 550

of firms were wholly citizen-owned while the remaining 293and 157

were joint venture with citizen stake and foreign-owned respectively

44 Language

From most of the participants investors do not have to learn Local Mauritius

language since English and French are the official languages in the country

Since most of the investors to Mauritius are either English or French speaking

language as such is not a barrier to business practices and success for

prospective investors

ldquohellipwell it is not very important for foreign investors to learn languages

spoken in Mauritius because we can speak both English and Frenchrdquo

[Participant A5]

ldquohellipactually language is not barrier to English or French speaking investorsrdquo

[Participant A21]

58

Language is perhaps the most complex and perplexing aspect of the

Mauritian social mosaic (Rassool 1996) Contrary to the results that show that

language is not a problem for investors since most of the investors who come

to Mauritius are English or French speakers who normally fits well in the

society since these are the two official languages

This intricacy derives from the number of languages spoken combined with

the uses to which they are put and the socio-political connotations they bear

Baker and Stein (1977) scholars studying language use in Mauritius have

found that English is associated with knowledge French with culture

Creole with egalitarianism and other languages ancestral heritage

Consequently although Creole is the most widely spoken language in the

country French predominates in the media and English is the official

language of government and school instruction (Stein and Baker 1977)

According to the 1983 census the top five languages were Creole 541

Bhojpuri 204 Hindi 115 percen French 37 and Tamil 37 These

figures indicate the principal language used in the home Most Mauritians

however speak several languages

Literature suggests that global organizational structures need to adopt

common rules and procedures in order to have a common bdquolanguage‟ for

communicating across cultural borders (Kostova 1999 Kostova and Roth

2003 Gupta and Govindarajan 2000) This is directly reflected by the results

above that foreign investors need not to learn the local language of locals but

its important to create a common language within the organisation that is

59

understood by all stakeholders in the organisation for effective and efficient

communication

45 Religion

The study found that main religions in Mauritius are Hindu Muslim and

Christianity to a lesser extent Hindus make up approximately half of

religiously affiliated Mauritians Of the remaining Mauritians approximately a

third are Christians and about 15 Muslim followed by small Buddhist and

Sikh communities It is therefore imperative that a foreign investor considers

religion of the people of Mauritius before setting up a business Religion

The study also found out that various religions found on Mauritius tend to play

a major part in the islands cultural events and churches temples and

mosques are to be found everywhere Hindu and Tamil celebrations are part

of Mauritian cultural life

ldquohellipFestivals such as Divali (the festival of lights) Holi (in which participants

are covered in colourful powders) and Thai Poosam in which Tamil devotees

pierce their bodies with masses of needles as an act of penance are

popularly attended by Mauritianshelliprdquo [Participant A60]

ldquohelliphellipthere are also a number of diverse practices and superstitions

originating in beliefs brought from Africa and Asia Local sorcerers known as

longanistes or traiteurs are sometimes called in to settle arguments exact

revenge or administer love potionshelliphelliprdquo [Participant B41]

60

However all communities live together in harmony with each other regardless

of religion the study learnt

hellipHarmonious separatism is how we characterise our communal relations

in Mauritiushellip [Participant A13]

Since all citizens are ldquodescendants of slavery there are no tribes unlike

other African countries This has made integration and assimilation easier and

it makes it very easy for any SME to adapt to the local conditions due to pre

existing harmonyrdquohellip [Participant A13]

It is worth noting that businesses remain closed in public religious days but

the purchasing power remains the same regardless of whether it‟s a public

holiday or not

ldquohellipthe demand is not dependent on whether itrsquos a holiday or nothelliprdquo

[Participant A11]

ldquohellipit doesnrsquot matter really whether its holiday or religious holidayhelliprdquo

[Participant A21]

According to Stein and Baker (1977) the Mauritian society is noteworthy for

its high degree of religious tolerance Mauritians often share in the

observances of religious groups other than their own In part as a result of the

multiplicity of religions Mauritius has more than twenty national holidays In

addition the government grants subsidies to all major religious groups

61

according to their membership (Stein and Baker 1977)This is also evident

from the results of the research

Ethnicity religion and language have been important factors in shaping the

way Mauritians relate to each other in the political and social spheres Despite

the fact that sectarian factors are less of a determining factor in peoples

social and political behaviour they remain an important clue to the peoples

past and self-identity (Rassool 2001) As a foreign investor understanding

the religious belies of a society and taking all the necessary details in to

consideration play a major role in an international business environment

setting (Hosftede 1980) For example observing religious holiday and making

sure employees get days off and annual leaves on such important days

having prayer rooms for those willing to pray at work and creating a non-

discriminatory environment for all employees

It is worth mentioning that while religion does not have a direct impact on

Mauritius investment since it an international business hub However it is

important for investors to take note of all the aspects of religion since it plays a

very important role in lives of the Mauritians For example there are religious

holidays as an employer it is important to follow the religious holiday calendar

and give annual leaves to employees on such important days

46 Social Life

For the interest of prospective investors the study found that the social life in

Mauritius is very much close to families and friends People all meet at open

markets for normal shopping and socialise over weekends ldquoeven ministers

62

managing directors of big companies go to open marketsrdquo [Participant

A12]

There is no busy night life in the country as well as cinema and theatres

because most people prefer home video entertainment ldquoMost people found at

social places like cinemas pubs clubs etc are employees and not

employersrdquohelliphellip [Participant A12] Prospective investors should therefore

know that they are likely to meet business associates at board rooms or at

their offices rather than at social centres

In a society where tolerance is a national virtue and ethnic conflicts are

invisible to the casual visitor it takes time to learn the dos and donts of

socialising ldquohelliphere in Mauritius you must realize that we walk on eggs

continuouslyhelliprdquo [Participant B36] For a peaceful and tolerant as Mauritius

undoubtedly is the diverse groups populating the island do not collectively

make up a nation Mauritius like any other island is a nation of nations and

compromise is the order of the day be it in politics in the economy in the

media or at a dinner party the study found

The study found out that unlike other African societies Mauritius people would

prefer to stay at home and watch movies play video games with kids or visit

friends and relatives to socialise or for a night out There are not many social

night clubs in Mauritius as compared to the United Kingdom ldquohellipmany homes

today have a Digital Video Decoders (DVD) sets and donrsquot see the importance

of going out to cinemas and would helliphelliphelliprdquo [Participant A12]

63

This does not come as a surprise since literature suggests that Mauritius

though it is multicultural society and an international hub for business there

are a quiet peaceful and tolerant nation and would prefer to keep their space

(Stein and Baker 1977)

47 Market Accessibility

The study found that as first foreign investor Mauritius government has open

market programme When the free operational zone initiative began investors

imported raw materials imported duty free and foreign companies had to

show transformation of raw materials into fished exports since the

government‟s aim was to increase exports thus improve balance of trade

However in the early stages the initiative did not work as expected because

of certain barriers

Lack of adequate government incentives to lure more investors

Too much repetition meaning most of the companies where doing the

same thing

Lack of skilled human resources

The scenario is summarised by participant B3 in the following

statementldquohelliphellipour people did not have culture of businessrdquo

For more access to the markets further initiatives were put into place The

government assured investors of freedom of capital movement that is the

investors were guaranteed that they would bring their money into and out of

the country whenever they felt like doing so In addition the government

64

embarked on providing more facilities (industrial buildings) and infrastructures

all over the country opening up rural areas because towns already had

infrastructures Lastly first time investors were provided with free access to

customs thus maintaining the earlier option of tax free imports

While Mauritius was doing all these events elsewhere in the world played to

their favour European Union and USA were imposing import quotas on

Chinese and Indian imports to prevent damping So these investors had to

look for alternative markets and Mauritius turned out to be one of such

markets But the government had to act quickly to avoid bdquotransit investors‟

ldquohellipthey are investors who want to do business when it favours them but when

they begin to loose certain privileges or profits get diminished then they take

offrdquohelliphellip [Participant B3]

To avoid this foreign investors were made to transfer skills and knowledge to

local community which led to emergence of Mauritius community of

manufacturing

ldquowho started from easy stitching like socks pyjamas bras etc and later

upgraded to big Mauritius labelshelliprdquo [Participant B3]

The study further found that the initiative did not stop there The government

further established Mauritius Enterprise Development Investment Authority

(MEDIA) in 1985 which took lead in looking for prospective investors from

65

Europe USA Hong Kong and India among others Any willing investor was

transported to Mauritius and accommodated freely on government accounts to

tour the country and carry out investment feasibility studies This helped to

popularise the investment opportunities in Mauritius and attracted many more

investors Currently MEDIA has been transformed into Mauritius Board of

Investment which is no longer in charge of managing industries but

ldquopromotes Mauritius businesses abroad and participates in trade fairs to

further open uprdquo [participant B3]

The study also found out that there are specific niche markets for foreign

investment in Mauritius namely the Offshore Industry the Financial Industry

the Construction and Tourism especially in the area of high class luxury

property market in form of villas hotels and apartments and of recent the

Information Technology (IT) industry These industries cover a large spectrum

including SMEs

ldquohellipone of these sectors makes a very good investment for any investor

especially the construction industryhelliprdquo [Participant A89]

The results agree with Putz (2000) which notes that niche markets make

establishing a business by immigrants easier because the immigrants needs

for consumer goods create a specific demand This is evidence by all the

incentive the Mauritian government have put in order to attract foreign

investors in to country for the benefit of the Mauritian population Furthermore

Putz (2000) emphasise the opportunities offered by the host country including

66

access to the market and job market conditions as important factors for

international business

48 The role of ICT to SME business in Mauritius

The study found that Mauritius has a very well established ICT sector It has

formed the backbone of SME success in Mauritius As early as 1990 the

country provided hellip ldquothe fastest broadband in the world to help SME business

investors who were each allocated free 2MB internet accessrdquohellip[Participant

A 23] Recently the government has in turn invested a lot of money in

developing a cyber city a few kilometres away from the capital Port Louis

which will form the hub for future investments

This high level of ICT development in the country has created SME in areas

such as offshore financial services calls centres and enhanced tourism

industry growth Any prospective investors are guaranteed of highly

developed ICT backed up by highly qualified local human resources The

offshore investment sector has even been further boosted byhellipldquobilateral

agreements with India allowing companies registered in Mauritius to transfer

funds to India tax freerdquohellip[participant B13]

It is hoped that in helliprdquo5 years time the whole island will have free wifi

connectivityrdquo participant B33 The country not only makes use of its advanced

ICT sector but has become a big player in the region as well For example

Mauritius state informatics computerised South African government in 1996 It

has also won other computerisation contracts in Zambia Zimbabwe Namibia

Kenya and Ghana To sustain such success ldquopartnerships have been formed

67

with global players such as Microsoft to provide training not just to Mauritius

nationals but other scholars from the South Eastern Africa region as

wellrdquohellip[participant B13]As matter of fact the government of Mauritius has

invested billions in building s cyber-city a few miles aware from the capital

Port Louis

ldquoits opening in July this year and it is expected to be the centre of attraction

for investorsrdquo [Participant B13]

ldquoactually the government invested in this cyber-city with the intention to

attract European and American investorsrdquo [Participant A6]

From these results there is evidence that technology plays a major role in

SME development Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

68

48 Governance and the role of women in SME sector

in Mauritius

Mauritius is a multicultural country with ldquo70 of the population of Chinese

Indian ancestry 2 white French origin and the remaining mixed race ndash

creolesrdquo [participant A17] Europe has not have a lot if cultural influence on the

country and predominant cultures are Asian African cultures Study found

that common folklore popular songs in Mauritius would also be ordinary

found on other African countries such as Senegal Mozambique Cameroon

and Sierra Leone among others signifying deep rooted African traditions

The government maintains ndash discrimination laws for either gender In the early

stages of SME development women provided the bulk of the labour in the

rural areas as industries moved away from cities into the rural areas There

are concerted efforts to get women into jobs especially leadership roles

ldquowomen themselves are too slow to act and take advantage of the

government incentivesrdquo

The study found out that woman in Mauritius do not occupy positions of

strategic power decision making This is not a surprise because it is the same

with most Southern African countries The government of Mauritius has put a

lot of structures to support women in business but women are taking it slow to

utilize these structures

69

There are many government agencies and organizations headed by women

and even cabinet posts but most women would rather stay out of politics

becausehelliphellipldquopolitics can get very dirty involving personal lives of politicians

which men donrsquot mind but women do mind a lot aboutrdquohellip[participant A 17)

However in other sectors like education and healthcare there are many

women represented in the labour force

The study also found out that just like any other society one can not ldquohellipstop

some kind of abuse for both males and females There are cases of both

female and male harassment but the law comes in to protect such victims

There are also cases of petty crime and rape involving women either as

perpetrators or victimsrdquohellip [Participant A13]

According to AllAfrica Global Media (2008) the winds of change are blowing

across the island of Mauritius and many men in this traditionally conservative

nation are working hand in hand with women to see that the common sense of

gender equality prevails The absence of women at the decision-making table

usually means the absence of their priorities and needs Irrespective of the

Southern African Develoment Community (SADC) Declaration there are so

few women in politics This is evident from the results of the study which found

that women will rather do health jobs and education than to play the dirty

tricks of politics

Women councillors make up a mere 37 in the Moka-Flacq District Council

This is the lowest figure not only in Mauritius but also in the SADC region

70

This is far from the 2005 30 target not to mention the 50 goal now being

set for the region and included the draft Protocol on Gender and Development

up for review at the August SADC Heads of State Summit ( AllAfrica Global

Media 2008)The results found out that there is also a few representations of

women in business Women do mostly the dirty jobs of caring for children and

their families and do not have the courage to enter the business sector This is

not surprising especially in the SADC region women play the minority role

and are rarely represented at the strategic decision making level hence their

needs are always neglected resulting in women poverty

49 Challenges faced by the country and hence SME investors

Stiff competition from other countries such ashelliphellipldquoBotswana Vietnam and

South East Asia in the textile industry due to cheap labour Maldives and the

Caribbean Islands for tourism difficult in Training enough qualified personnel

in ICT to cope with demand International competition and access to fundsrdquo

hellip[participant B13]

To face these challenges the study found that the country has expanded

tertiary education and formed partnerships with foreign universities such as

ldquoFrench Scientific University which has been running Medical school in

Mauritius for 10 years By the time of this study an agreement had been

reached by Thames valley university (UK) to open up campus in

Mauritiusrdquohellip[participant B15] The aim of the government is to offer high

quality education to students from the region as well as far away like China at

affordable cost and to compete with European universities Further to

71

educational development the study also found out that the country is striving

to create partnerships with ldquoresearch organisations and to create high quality

healthcare so as to benefit from health tourism where would just travel to the

country to get affordable high quality specialised health carerdquohelliphellip [Participant

A3]

Finally results show that there is stiff competition from different sectors of

business and other force which needs to be taken into consideration when

doing business internationally Globalization tends to redistribute economic

rewards in a non-uniform manner a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) It essential to know all

the factors surrounding the business sector and understanding all the

business practices before investing to avoid any loss

72

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

Research on culture and IB is definitely a bdquogrowth‟ area because the business

world is in many ways becoming one The researcher concluded the following

based on study findings

Firstly the cultural diversity and harmony of the island make Mauritius a

unique place in the world It is also known for its social peace political stability

and racial harmony Its steady economic growth over the years coupled with

its nation‟s social cohesion and prosperity ensure continuing development

Secondly Mauritius enjoys a literacy rate over 80 percent Skilled labour

graduates and qualified professional including lawyers engineers IT

programmers consultants accountants and chartered secretaries are

available to suit virtually all business needs in two international languages

English and French Language is therefore not a barrier to foreign investment

In addition academic training at the University of Mauritius and the newly

established University of Technology a comprehensive system of vocational

training through the Industrial and Vocational Training Board (IVTB) ensures a

ready supply of skills in a number of fields such as tourism engineering

electronics jewellery ICT printing and textiles

Thirdly In view of the importance of foreign investment as a source of

sustenance to economic growth the government of Mauritius has taken a

series of policy measures to encourage its flows into manufacturing offshore

73

banking and financial services information technology communication and

tourism As far as foreign investors are concerned Mauritius offers itself as an

attractive destination because several positive features such as political

stability availability of skilled labour and investment-friendly rules and

institutions

Fourthly after a sustained growth path over the last three decades based on

sugar textiles and tourism Mauritius is now shifting gears to move towards a

higher stage of economic development so as to consolidate its position as a

premier international hub Foreign Direct Investment (FDI) has played an

important role in the development of Mauritius and will again be decisive when

the country embarks on high value-added capital intensive and knowledge-

based activities

Fifthly the government plays the role of a facilitator and has endeavoured at

all times to create the most conducive investment environment by enacting

appropriate legislations building state-of-the-art infrastructure investing in

human capital and introducing packages of investment incentives for the

manufacturing financial services and ICT sectors so as to enhance the image

of Mauritius

In this respect the Board of Investment (BOI) is the first contact point for

anyone investing in Mauritius Operating under the aegis of the Ministry of

Finance the BOI was established in March 2001 under the Investment

74

Promotion Act to give a new impetus to foreign direct investment The BOI is

the apex organization for the promotion and facilitation of investment in

Mauritius The primary role of BOI is to stimulate the development expansion

and growth of the economy by promoting Mauritius as a competing business

and service centre It aims at streamlining the legal framework and to make

better provision for the promotion and facilitation of investments in Mauritius It

acts as a facilitator and provides a one-stop shop service to both local and

foreign investors ensuring reliable and speedy processing of applications The

BOI receives processes and approves all applications for investing in

Mauritius It also assists investors in obtaining the necessary secondary

permits and clearances from relevant authorities thus ensuring a speedy

implementation project

Six Mauritius pursues a liberal investment policy and actively encourages

foreign direct investment in all sectors of the economy Attractive packages of

both fiscal and non-fiscal incentives tailor-made to the needs of each priority

area of development are offered to investors Excellent opportunities for

investment in Mauritius exist in various sectors of the economy including

manufacturing information technology knowledge industry regional

headquarters tourism and leisure financial services Freeport activities

amongst other sectors Some of the priority areas are in Information and

Communication Technology which is set to a play a lead role in the economic

development of the country in the medium and long terms The availability of

high bandwidth connectivity (with SAFE Project and international Gateways)

at near global parity in quality and tariff on the one hand and the setting up of

75

dedicated IT habitats including the Cyber city at Ebeacutene on the other hand

plus total Government support to this industry are testimony of the importance

of this industry to Mauritius Others include the manufacturing sector textiles

and apparel the spinning sector electronics and light engineering medicals

and pharmaceuticals agro-business leather products and jewellery and

watches

The export-oriented manufacturing sector has been the backbone of the

Mauritian economy for the past three decades This sector remains a major

constituent of the Mauritian economy in terms of foreign exchange earnings

employment and contribution to GDP and is called upon to continue to play

an important role in the consolidation and diversification of the industrial base

of the country certain

Lastly some incentives provided by government to foreign investors In the

manufacturing sector these include among others

No customs or duty or sales tax on raw materials and equipment

No tax on dividends

No capital gains tax

Free repatriation of profits dividends and capital

50 relief on personal income tax for expatriate staff

New incentives for the ICT Sector consist inter alia of

the availability of tax holiday up to year 2008 for specified

pioneering high-skills ICT operators typically geared towards the

export market such as software development multi-media and to

high-level ICT training institutions

76

customs duty-free import of ICT and similar equipment

50 relief of personal income tax for a specified number of foreign IT

staff

duty-free import of personal belongings of foreign IT staff

effective fast track procedure for procession of visa and work

permits for foreign staff including spouses

From the above the research concludes that Mauritius being a multicultural

society as it is the culture they share does not have a direct impact on

investment in Mauritius because of it is an international hub for business It is

also expected that from the results the situation is not going to change after

time but will keep in this shape for a long since it is the government incentive

to attract more investors into the country However there are certain aspect of

culture eg believes that foreign investors need to understand and take into

consideration This study recommends any prospective investor to make good

investment in to Mauritius without fear

77

CHAPTER SIX

REFLECTIONS FROM THE STUDY

The views derived from this study might not be directly applicable to the whole

region because of variations in socioeconomic settings in various parts of the

Mauritius Also views expressed in this study were obtained mainly from

urban based managers and respondents and might not be similar to rural

based SMEs from the same community or area

Some scholars might not support the sampling techniques used but they

were the most practicable given the circumstances

Legal practitioners in Mauritius were supposed to be part of the sample but

they were hard to reach with some declining to participate

Demographically and geographically the sites were larger than anticipated

given the time and resources available for the study

Lastly the study was limited to the previous 20 years which might have

yielded same generational trend missing the opportunity to get data across

various generations within the sites

78

CHAPTER SEVEN

FUTURE RESEARCH

With more funding and resources a similar study could be conducted

throughout a wider geographic region and encompassing all categories of

SMEs micro small and medium Furthermore with more time a greater

number of interviews could be conducted which would provide richer data that

would be more in depth for conclusive analyses to be made Additionally

participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

79

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

WORD COUNT 16 969

80

APPENDICES APPENDIX 1 MauritiusData Profile

2000 2005 2006

World view

Population total (millions) 119 124 125

Population growth (annual ) 10 08 08

Surface area (sq km) (thousands) 20 20 20

Poverty headcount ratio at national poverty line ( of population)

GNI Atlas method (current US$) (billions) 444 653 681

GNI per capita Atlas method (current US$) 3740 5250 5430

GNI PPP (current international $) (billions) 891 1239 1334

GNI per capita PPP (current international $) 7510 9970 10640

People

Income share held by lowest 20

Life expectancy at birth total (years) 72 73 73

Fertility rate total (births per woman) 20 20 20

Adolescent fertility rate (births per 1000 women ages 15-19) 39 40 41

Contraceptive prevalence ( of women ages 15-49)

Births attended by skilled health staff ( of total) 100 99

Mortality rate under-5 (per 1000) 18 15 14

Malnutrition prevalence weight for age ( of children under 5)

Immunization measles ( of children ages 12-23 months) 84 98 99

Primary completion rate total ( of relevant age group) 105 97 92

Ratio of girls to boys in primary and secondary education () 98 100 103

Prevalence of HIV total ( of population ages 15-49) 06

Environment

Forest area (sq km) (thousands) 04 04

Agricultural land ( of land area) 557 557

Annual freshwater withdrawals total ( of internal resources)

Improved water source ( of population with access) 100

Improved sanitation facilities urban ( of urban population with access) 95

Energy use (kg of oil equivalent per capita)

CO2 emissions (metric tons per capita) 23

Electric power consumption (kWh per capita)

Economy

GDP (current US$) (billions) 447 629 635

GDP growth (annual ) 40 46 35

Inflation GDP deflator (annual ) 37 48 41

Agriculture value added ( of GDP) 6 6 6

Industry value added ( of GDP) 31 28 27

Services etc value added ( of GDP) 63 66 68

Exports of goods and services ( of GDP) 63 57 60

Imports of goods and services ( of GDP) 65 61 67

Gross capital formation ( of GDP) 26 23 25

Revenue excluding grants ( of GDP) 220 214 215

Cash surplusdeficit ( of GDP) -11 -21 -30

States and markets

Time required to start a business (days) 46 46

Market capitalization of listed companies ( of GDP) 298 416 567

Military expenditure ( of GDP) 02 02

Fixed line and mobile phone subscribers (per 100 people) 39 82 90

Internet users (per 100 people) 73 241 145

Roads paved ( of total roads) 97

High-technology exports ( of manufactured exports) 1 2 24

Global links

Merchandise trade ( of GDP) 82 84 91

Net barter terms of trade (2000 = 100) 100 109 115

External debt total (DOD current US$) (millions) 1713 2153 1997

Short-term debt outstanding (DOD current US$) (millions) 767 1363 1363

Total debt service ( of exports of goods services and income) 181 72 71

Foreign direct investment net inflows (BoP current US$) (millions) 266 39 107

Workers remittances and compensation of employees received (US$) (millions)

177 215 215

Official development assistance and official aid (current US$) (millions) 20 34 19

Source World Development Indicators database April 2008

81

APPENDIX 2

SUMMARY GENDER PROFILE (Mauritius)

Mauritius

Sub-Saharan Africa

Upper middle income

1980 1990 2000 2004 1980 2004 1980 2004

GNP per capita (US$) 1210 2300 3690 4640 652 601 2391 4769

Population

Total (millions) 10 11 12 12 3850 7258 4394 5762

Female ( of total) 507 501 502 503 503 501 515 514

Life expectancy at birth (years)

Male 63 66 68 69 47 46 63 66

Female 69 73 75 76 50 47 71 73

Adult literacy rate ( of people aged 15+)

Male 848 884 954

Female 750 805 942

LABOR FORCE PARTICIPATION

Total labor force (millions) 0 0 1 1 157 299 193 256

Labor force female ( of total labor force)

37 34 34 35 43 42 42 41

Unemployment

Total ( of total labor force)

33 88 102 12

Female ( of female labor force)

36 96 126 134

EDUCATION ACCESS AND ATTAINMENT

Net primary school enrollment rate

Male 91 96 94 68

Female 92 97 96 60

Progression to grade 5 ( of cohort)

Male 97 99

Female 98 99

Primary completion rates ( of relevant age group)

Male 61 105 98 66 95

Female 63 104 102 56 96

Youth literacy Rate ( of people aged 15-24)

Male 912 937 978

Female 911 954 974

HEALTH

Total fertility rate (births per woman)

27 23 20 20 67 53 31 20

Contraceptive prevalence ( of women aged 15-49)

75 26 76 22 69

95

82

APPENDIX 3

DATA COLLECTION FORM FOR THE SURVEY Sitehelliphelliphelliphelliphellip Participant numberhelliphelliphelliphellip MANAGING DIRECTOR CEO MANAGER

Age group -25 26 ndash 35 36 - 45 46-55 56-64 65+

Education Nursery ndash Standard 4

Std 5 ndash 7 (8) Form 1 ndash 2

Form 3 ndash 4 or A level

College University

Employment Yes No Business (what type)

Partnership Whole Citizen

Joint Venture

Age of Company

1-3 years 4-6 years 7-10 years

11-15 Above 15yrs

Number of Employees

10-25 50-99 100-149 150-200

Place of birth

In the constituency

Outside the constituency

Where

Residence Rural Urban Where

Before starting business

After business

Children

Boys Number

Girls Number

Any born a Yes None

Are they in school

Yes No Some

Working Yes No Some

Annual Sales

Balance Sheet

Less than R1000000

R101 000- 250 000

R251 000- 15 million

R 15 million +

Years Employed as CEO

0-3 4-7 8-14 15-19 Over 20 years

83

APPENDIX 4 Qualitative data questionnaire The following questions were used as a guide during the focus group discussions However they were not followed in the strict order or wording as they appear here

SOCIAL INCLUSION EXCLUSION

I am going to ask you questions regarding support you think the society could give foreign investors There is no right or wrong answers it is just about your opinion

a) How do you feel about foreign investors coming to Mauritius

b) How has your friendship with foreign business before and after they arrive in Mauritius

c) Do you keep in touch with foreign businesses around you and prospective investors

d) In your opinion how does foreign business feel about Mauritius

e) Are foreign businesses doing well or badly

f) What support structures or government incentives are there for foreign investors

g) What kind of support would you like to receive from the government

BUSINESS ATTITUDE AND BELIEFS

I am now going to ask you some general questions about business and your opinions about it

a) How would you describe the general business environment

b) Do you find it difficult to do business with people from different countries of the world Why

c) What do you believe the first thing to do on the morning before opening

your business (Local people) Why

d) How best can the Mauritius people be motivated into business How do you get over them

84

e) What areas do local people consider as niche areas for foreign

business

f) How do local people organize their business Why

g) As a local business person what would you consider as abomination of business in Mauritius Why

h) What is the role of women in the business sector

CULTURE

I am now going to ask you questions about the your culture

a) What are your views about business culture in Port Louis

b) What are the challenges of national culture on business practices in your opinion

c) What are the benefits of culture on business practice

d) Do you think foreign investors need to know the local language when investing in Mauritius

e) If you were to advice a foreign investor what would you want them to know about Mauritius

f) How do you think the family daily practice influences business in

Mauritius

g) What business actions of behaviors are sensitive to the local people

h) How best can foreign investors assimilate with the local business people

i) What do local people like to buy on weekends week days public religious holidays

j) What marketing strategies violet the culture of Mauritius ndashwomen naked Eating behavior Etc

85

APPENDIX 5

Introductory letter consent form

TITLE CULTURE AND INTERNATIONAL BUSINESS

ENTREPRENUERSHIP A CASE STUDY OF MAURITIUS

INTRODUCTION

I am Angelinah Boniface a student pursuing Masters of Science in

Information Systems the University of Sheffield United Kingdom I am

conducting a study on the Impact of culture on small and medium

enterprises for my dissertation The study is expected to last 3 months and a

report of the findings will be availed to all interested stakeholders including the

university as part of course requirements

PURPOSE OF THE STUDY

This study is intended to gain insight into views and opinions about

widowhood and inheritance in relation to health and well being of participants

and the community at large Evidence from this study may be useful in future

government and development agencies‟ planning and provision of relevant

interventions for the benefit of the whole community

VOLUNTARINESS AND CONFIDENTIALITY

Your participation in this study is purely voluntary and you can withdraw

at any time should you feel uncomfortable to proceed Information obtained

from this study will be used for no any other purpose other than the

dissertation It will be kept confidential only accessible to the researcher and

pseudonyms will be used to ensure anonymity and confidentiality of

participants and location The researcher will strive to treat all participants

with dignity respect equality and minimise possible harm that might arise

from the study

Agreeing to take part in this study will be treated as your consent to be

involved in this research BUT YOU HAVE THE RIGHT TO WITHDRAW

THE CONSENT

86

RISKS AND BENEFITS

There are no risks to the questions that will be asked If at any point you feel

uncomfortable to answer any question please feel free to ignore such to avoid

any harm

There is likely to be no immediate benefits to you as a participant However

the information obtained in this study will go a long way in informing the

younger generation and wider audience about the culture It might also be

used by the government and other development agencies to plan for

interventions relevant to the needs of widows in your community in the future

based on the evidence you have provided in this study

CONTACTS

The researcher can be contacted at +44 0791263163 lip07acbshefacuk

or linabonyahoocom in case of any questions issues

In case of any problems that need university attention my supervisor can be

contacted at kalbrightshefacuk

PLEASE DONrsquoT TAKE PART IN THIS STUDY IF YOU ARE BELOW 18

YEARS OF AGE

Thank you very much for your anticipated cooperation

Researcher‟s signature Participant‟s signature

helliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

87

REFERENCES

Bhagat RSet al (2002) Cultural variations in the cross-border transfer of

organizational knowledge an integrative framework Academy of

Management Review 27(2) 204ndash221

Boyacigiller NA amp Adler NJ (1991) ldquoThe parochial dinosaur organizational

science in a global contextrdquo Academy of Management Review 16(2) 262ndash

290

Bowling A (ed) (2002) Research methods in health Investigating health and

health services Buckingham Open University press

Dabee R and Greenway D (2001)The Mauritian Economy A Reader

PalgraveNew York

Dawson C D (2002) Practical research methods A user friendly guide to

mastering research techniques and projects Oxford How to Books Ltd

Denscombe M (ed) (2007) The good research guide for small scale social

research projects Berkshire Open University Press

Denscombe M(ed) (2003) The good research guide For small scale social

research projects Maidenhead Open University Press

Economic And Social Research Council (2005) ESRC research ethics

framework [online]

httpwwwesrcsocietytodayacukESRCInfoCentreopportunitiesresearch5

Fethics5Fframework [ Accessed May 05 2008]

88

Gilbert N (ed) (2001) Researching social life London Sage Publishers

Grbich C (1999) Qualitative research in health An introduction London

Sage publications

Hunter D amp Lang T (1993) The Leeds declaration Leeds Nuffield Institute

for Health

Neuman L W(ed) (2000) Social research methods qualitative and

quantitative approaches Needham Heights MA Allyn amp Bacon

Maynard M amp Purvis J (1994) Researching womens lives from a feminist

perspective London Taylor and Francis group

Muuka GN (2002) Africas informal sector matters a challenge to scholars

to close the knowledge gap Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

Business and Development International Conference Port Elizabeth April 3-

6 pp1-6

Southwood R (2004)The impact of ICT on SMEs ndash a motor for future

economic growth in hard-pressed times [Online] Balancing Act news update

wwwbalancingact-africacomnewscurrent1html [Accessed 26 January

2008]

Machacha L (2002) Impact of information technology on small and medium

enterprises (SMEs) in Botswana Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

89

Business and Development International Conference Port Elizabeth April 3-

6 pp277-82

Organisation for Economic Co-operation and Development (OECD)

(2000)OECD study highlights role of small and medium enterprises in job

creation Organisation for Economic Co-operation and Development

[Online]wwwoecdorgmediapublishpb00-11ahtm [Accessed 8 July 2008]

Commonwealth Secretariat UK (2006) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius London Commonwealth

Secretariat

Reed DM (1998) Using the Business Excellence Model in Small Service

Business British Quality Foundation

Taylor AW amp Adair RG (1994) ldquoEvolution of Quality awards and self

assessment practices in Europe a case for considering organisation sizerdquo

Total quality Management 5 (4) 227-237

United Nations (1993) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

Johanson J amp Wiedersheim-Paul F (1995) The Internationalization of the

Firm - Four Swedish Cases Journal of Management Studies 20 (3) 123-139

90

Chui ACW Lloyd AE and Kwok CCY (2002) The determination of

capital structure is national culture a missing piece to the puzzlerdquo Journal of

International Business Studies 33(1) 99ndash127

Earley PC amp Gibson CB (2002) Multinational Teams A New Perspective

Lawrence Earlbaum and Associates Mahwah NJ

Gibson CB (1999) ldquoDo they do what they believe they can Group-efficacy

beliefs and group performance across tasks and culturesrdquo Academy of

Management Journal 42(2) 138ndash152

Hofstede G (1980) Cultures Consequences International Differences in

Work-Related Values Sage Newbury Park CA

SMIDO (2006)A new Vision For SMEs Development Mauritius

Government Printer Port Louis

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Stone A (1997) SMEs and Technology why should we make special efforts

to help World Bank

Bhagat RS et al (2003) Knowledge in Cross-Cultural Management in Era

of Globalization Where Do we Go from Here in D Tjosvold and K Leung

91

(eds) Cross-Cultural Management Foundations and Future Ashgate Englan

155ndash176

Cairncross F (2001) The Death of Distance Harvard Business School Press

Boston MA

Commonwealth Secretariat UK (2005) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius Commonwealth Secretariat

Drucker PF (1995) Managing in a Time of Great Change Truman Talley

BooksDutton New York

Guilleacuten M (2001) ldquoIs globalization civilizing destructive or feeble A critique

of five key debates in the social science literaturerdquo Annual Review of

Sociology 27 235ndash260

Gibson CB and Cohen SG (2003) Virtual Teams that Work Creating

Conditions for Virtual Team Effectiveness Jossey-Bass San Francisco

Grazol P et al(2004) ldquoThe Effect of Culture on IT Diffusion Email and Fax in

Japan and the US Information Systems Researchrdquo Journal of International

Consumer Marketing 16 4 pp 29-64

Greider W (1997) One World Ready or Not Crown Business New York

92

Gertler MS (1997) The Invention of Regional Culture In Lee R and Willis J

eds Geographies of Economies London Arnold

Govindarajan V and Gupta AK (2001) The Quest for Global Dominance

Transforming Global Presence into Global Competitive Advantage Jossey-

Bass San Francisco

Haire M et al(1966)Managerial Thinking An International Study Wiley

New York

Heuer M et al(1999) Cultural stability or change among managers in

Indonesia Journal of International Business Studies 30(3) 599ndash610

Hofstede G (1997) Cultures and Organizations Software of the Mind New

York McGraw-Hill

Hofstede GH (2001) Cultures Consequences Comparing Values

Behaviors Institutions and Organizations Across Nations London Sage

Publications

Hoecklin L (1995)Embedded Autonomy States and Industrial

Transformation Princeton NJ Princeton University Press

93

IBP USA (2002) Mauritius Investment and Business Guide IB Tauris and Co

LTD London

Kerr C et al (1960) Industrialism and Industrial Man Harvard University

Press Cambridge MA

Kirkman BL amp Shapiro DL (2000) ldquoUnderstanding why team members

won‟t share an examination of factors related to employee receptivity to team-

based rewardsrdquo Small Group Research 31(2) 175ndash209

Lisenda L (2003) Small and medium-scale enterprises in Botswana their

characteristics sources of finance and problems BIDPA Gaborone

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Meredith GG (ed) (2004) Small Business Management in Australia

McGraw-Hill Sydney

Mistry PS (1999) ldquoCommentary Mauritius ndash quo vadisrdquo African Affairs 98

(393) 551ndash69

Mullins LJ(ed) (1999) Management and Organizational Behavior 5th ed

London Financial Times Pitman

94

Myers MDamp Tan FB (2002) ldquoBeyond Models of National Culture in

Information Systems Researchrdquo Journal of Global Information Management

10 (1) 112-134

Putz R (2000) ldquoCulture and entrepreneurship views from the middle and

lower level managersrdquo Journal of Business Ethics 22 145- 153

Scottish Economic Statistics Scottish ExecutiveONS IDBR (2005)Size

Analysis of Welsh Business SDR 692004Statistical Press Release URN

0440

Straub D et al (2002) rdquoTowards A Theory-Based Measurement of Culture

Journal of Global Information managementrdquo 10 (1)

Schaeffer RK (2003) Understanding Globalization The Social

Consequences of Political Economic and Environmental Change Rowman amp

Littlefield Lanham MD

SMIDOA new Vision For SMEs Development(May 1996)

SMME Task Force Report (1998) Small medium and micro-enterprises task

fore force report Government Printer Ministry of Commerce and Industry

Sondergaard M amp Hofstede G (1994) ldquoA study of Reviews Citations and

Replicationsrdquo Organization Studies 15 (3) 447-456

95

Schein EH (1992) Organizational Culture and Leadership Jossey-Bass

San Francisco

Stone A ( 1997) SMEs and Technology why should we make special efforts

to help (World Bank 1997)

Statistical Press Release (2005) URN 0592 Office for National Statistics

Weisinger JYamp Trauth EM (2002) ldquoSituating Culture in the Global

Information Sectorrdquo Information Technology amp People 15 (4) 306-320

United Nations (2005) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

i

TABLE OF CONTENTS

Contentshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipi Dedicationhelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipiv Acknowledgementshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipv List of Abbreviationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipvii List of Illustrationshelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellipviii Abstracthellipix 10 INTRODUCTION 1

11 Background to the study4

12 An Overview of Mauritian Economy8

13 Mauritius SME Background10

14 Purpose of Statement12

15 Aims and Objectives12

16 Research Questionshellip13

161 Sub-Questions13

17 The Significance of the Study13

17 Definitions of Termhelliphelliphellip14

20 LITERATURE REVIEWhelliphellip16 21Embracing Cultural Challenge in an Era of Globalisation16 22The Dynamics of Culture as a Multi-level Multi-layer Construct20 23International Business and Culture23 24Putz Model for Immigrant Business and Culture25 25 The Role of Information Communication Technologies30 26Cross Culture and International Business33

ii

27Investing in Mauritius35 30 METHODOLOGY37 31Research Setting39 32Methods40 33Research Participants and Sampling42 34Data collection Instrumentshelliphellip43 35Ethical Considerationshelliphellip44 36Procedure45 37Data Analysis46 38 Planned Programme of Dissemination47 39Time Scale48 310 Limitations and Delimitations48 40 RESEARCH FINDINGS AND DISCUSSION50 41Respondents Rate According to Sectors51 42Demographic Profile Participants52 43Characteristics of Responding Firms55 44Language57 45Religion 59 46Social life61 47 Market Accessibility63 48The Role of ICT to SME Business in Mauritius 66 49Governance and the Role of Women in SME sector in Mauritius68 410 Challenges Faced by the Country and Hence SME investors70 50 CONCLUSION AND RECOMMENDATIONS72 60 REFLELECTIONS FROM THE STUDY77

iii

70 FURTHER RESEARCH78 80 APPENDICES80 81 Apendix 180 82 Apendix 281 83 Apendix 382 84 Apendix 483 85 Apendix 586 90 REFERENCES87

iv

DEDICATIONS

To my father Shadreck Boniface who passed on before I could give back all

the good things you did in my life you will always be remembered by me for

the gap you left in my life no one can replace may his soul rest in peace To

my mother in recognition of your worth for all the support you gave A feeling

bears on itself the scars of its birth it recollects as a subjective emotion its

struggle for existence it retains the impress of what might have been but is

not and hope if the fool would persist in his folly he would become wise To

my daughter and to all my family and friends this is for you

THE BOTSWANA FLAG

The Botswana flag was officially adopted on September 30 1966

The colours on the flag correspond to those on the national coat of arms The

blue represents water the white-black-white bands depict the racial harmony

of the people as well as the pluralist nature of the society They are inspired

by the coat of the zebra the national animal

v

This report is dedicated to all those who spend their daily lives trying to cope

with the challenges of HIVAIDS and all those who are affected by this

disease and to the new AIDS free generation

ACKNOWLEDGEMENTS

My sincere gratitude to all whose knowledge skills experience and support

went into this work First are the authors of various literatures whose work

guided this dissertation Overly important too are all those participants who

offered their resources and business experiences which has influenced the

outcome of this paper

To the University of Sheffield thanks for the opportunity to pursue this course

at your institution and the experts you provided to teach various aspects of the

course A lot of thanks to the course leader and my supervisor Dr Kendra

Albright for all the guidance and motivation she provided during the entire

programme Moreover for the opportunity she gave me to pursue this

research Thanks too to the rest of the tutors especially Dr Barry Eaglestone

who refined my research knowledge and skills Special thanks go to my

sponsor The Commonwealth Scholarship for providing funds for me to purse

my programme To my Administrator Dr Fiona Groccut and Sarah Ferdecio

thank you for the fast response you would give whenever I needed your help

A special thank you to Richard Campos the Managing Director for

RCBusiness Support Ltd for the support you throughout this project

I could not do without the invaluable family support from my sister Juliet

Shadreck and my mom Monica Boniface thank you mum Particular thanks

to Theo my daughter who I left at a tender age to come and pursue this

vi

course To Gobonaone Keaosenya thanks for your moral and emotional

support you gave during my studies To my family Lebo Kay Goitse Kgosi

Monica Jullie Douglas and all other friends not mentioned thanks for your

moral support Thanks to my family for their prayers and support

Thanks too to all my MSc in Information Systems classmates for sharing their

extensive and diverse knowledge skills and experiences during the course I

acknowledge friends and colleagues in Botswana who encouraged me to

pursue this programme particularly Dr Jorosi for the inspirational advice

Special thank to my sincere friend Patience Chakandinakira for her moral

supportTo Dr Phil Lyoka thank you for the editing and grammar corrections

and all the support you gave throughout this project

Due to technical limitations I am not able to list everyone but I OWE ALL OF

YOU who provided moral academic technical economic support or

otherwise a very BIG THANK YOU including whoever reads this work

vii

LIST OF ABBREVIATIONS

BIDPA Botswana Institute for Development Policy and Analysis BOI Board of Investment ESRC Economic And Social Research Council EPZ Export Processing Zones FDI Foreign Direct Investment GDP Gross Domestic Product GSP General System of Preferences IB International Business ICT Information Communication Technologies ILO International Labour Organisation IT Information Technology ISO International Organization for Standardization IVTB Industrial and Vocational Training Board MEDIA Mauritius Enterprise Development Investment Authority MNC Multinational Companies NAFTA North American Free Trade Agreement NHPA National Handicraft Promotion Agency OECD Organisation for Economic Co-operation and Development SADC Southern African Development Community SEHDA Small Enterprises amp Handicraft Development Authority SME Small and Medium Enterprise SMME Small medium and micro-enterprises SMIDO Small amp Medium industries Development Organisation UK United Kingdom UN United Nations USA United States of America WTO World Trade Organization

viii

LIST OF ILLUSTRATIONS TABLES Table 1 THE STUDY TIME SCALE

2 RESPONDENTS RATE ACCORDING TO SECTORS

3 AGE GROUP AS PER PARTICPANT

4 GENDER PROFILE

5 EDUCATION PROFILE 6 YEARS EMPLOYED AS CEO 7 COMPANY AGE PROFILE 8 NUMBER OF EMPLOYEES 9 ANNUAL SALES 10 OWNERSHIP

FIGURES 1 MAP OF MAURITIUS SHOWING ALL PROVINCES

2 MAURITIUS MAP SHOWING POLITCAL DIVISIONS

3 THE DYNAMIC OF TOP-DOWN-BOTTOM-UP PROCESS ACROSS LEVELS OF CULTURE

4 PUTZ MODEL FOR IMMIGRANT BUSINESS AND CULTURE

5 THE BASIC MECHANISM OF INTERNATIONALISATION-STATE AND CHANGE ASPECT

ix

ABSTRACT

In this new millennium few executives can afford to turn a blind eye to global

business opportunities The globalizing wind has broadened the mindsets of

executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories One such new

trajectory is the concern with national culture Whereas traditional IB research

has been concerned with economic legal issues and organizational forms and

structures the importance of national culture has become increasingly

important in the last two decades largely as a result of the classic work of

Hofstede (1980) National culture has been shown to impact on major

business activities from capital structure (Chui et al 2002) to group

performance (Gibson 1999)

The purpose of this study was to understand the concept on how to penetrate

a new international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

Data was collected through telephone interview web survey literature review

and face to face interview involving business managers legal stakeholders

and government officials and former government ministers About 17

telephone interviews were done with only government officials 4 face to face

interviews and 140 web survey interviews questions All the respondents were

x

randomly selected and respondents would suggest further participants Data

was put in to categories and themes and analysed according to those themes

Putz (2000) model was used as guide to selection of themes

Findings revealed the following 1 Language and religion are not a barrier to

foreign investment in Mauritius 2 Mauritius is a peaceful and tolerant nation

and most of its social life revolves around family and friends 3 Market

opportunities exits in the manufacturing industry offshore financial services

cyber culture and the construction industry 4 The country‟s business

economy faces stiff competition from Botswana South Africa and Vietnam 5

The government plays an important role in ensuring security for foreign

investors

From the results it was concluded that culture plays an important role in the

daily lives of the Mauritian people but it does not have a direct impact to

investment in Mauritius

1

CHAPTER ONE

INTRODUCTION

Globally Small and Medium Enterprises (SMEs) are increasingly regarded as

vital for diversifying economies through the creation of employment

(Machacha 2002 p 277) The OECD (2000) notes that small and medium-

sized enterprises account for 60-70 percent of jobs created in member

countries Southwood (2004) in discussing the status of the SME sector in

Africa observed that governments and large corporations dominated

economies of the countries yet the real engine of economic growth lay with

SMEs Muuka (2002 p 1) in discussing the SME sector in Africa noted that

the informal sector is huge due to the large numbers of employees it absorbed

as a consequence of inadequate jobs and opportunities in the formal sector

The author points out that in many African countries the informal sector is

estimated to employ from three to six times the number of employees in the

formal sector However very little has been documented through research

about this important sector

In Mauritius the Mauritian government believes that the real engine of

sustainable and equitable growth is in the SME sectors Not only is it of great

importance for the rate of job creation and income generation but also it

deserves particular attention since the sector has been largely neglected in

the past In this respect this study of Mauritius is important in addressing

some of issues of culture by using the International business as a framework

for this study to understand the business environment in Mauritius and the

potential for growth in a global perspective (Stone 1997)

2

In this new millennium few executives can afford to turn a blind eye to global

business opportunities Japanese auto-executives monitor carefully what their

European and Korean competitors are up to in getting a bigger slice of the

Chinese auto-market Executives of Hollywood movie studios need to weigh

the appeal of an expensive movie in Europe and Asia as much as in the US

before a firm commitment The globalizing wind has broadened the mindsets

of executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories

However research shows that as markets competition and organisations

globalise the business people businesses themselves and consumers

involved in these institutions increasingly have to interact manage negotiate

and compromise with people from different cultures (Hofstede 1997

Hoecklin 1995) Global business managers report that when doing business

overseas challenges mount For example structural conditions physical

social and economic arrangements can affect business operations and

outcomes as can the varied norms and behaviours that come with different

national cultures

One such new trajectory is the concern with national culture Whereas

traditional IB research has been concerned with economiclegal issues and

organizational forms and structures the importance of national culture

broadly defined as values beliefs norms and behavioral patterns of a

national group (Hofstede1980) has become increasingly important in the last

two decades largely as a result of the classic work of Hofstede (1980)

3

National culture has been shown to impact on major business activities from

capital structure (Chui et al 2002) to group performance (Gibson 1999) For

reviews see Boyacigiller and Adler (1991) and Earley and Gibson (2002)

Weisinger and Trauth (2003) report that culture evolves and takes unique

forms in local offices of organizations This means that culture is both dynamic

and situated in its local context Thus external conditions both structural and

cultural can influence global business Yet small and medium enterprise

(SMEs) managers can have an impact on how their organizations‟ cultures

evolve Therefore strategic leaders need to introduce unique norms values

and processes that fit together coherently in successful organizations

Therefore the main purpose of this case study is to explore and understand

the Small Medium Enterprise (SMEs) business environment in Mauritius and

how SMEs can penetrate the business culture there

The purpose of this paper is therefore to explore and understand how national

culture influences international business decisions and how to culture affects

international business investment using Mauritius as a case study

In this chapter the author outlines the background of the study specifies the

study objectives describes the significance of the study gives methodological

overview and finishes off by outlining definitions of key terminologies

4

11 Background to the Study

Strategically located in the Indian Ocean at the crossroads of Africa and Asia

Mauritius is reputed for its beautiful countryside and its 150 kilometres of white

sandy beaches and transparent lagoon A British colony that gained

independence in 1968 officially known as Republic of Mauritius the country is

positioned to the east of the Madagascar Islands The geographical

coordinates of the nation are 20ordm17 South latitude and 57ordm33 East longitude

The total area covered by the island nation is 2040 square kilometres

Mauritius enjoys a maritime sub-tropical climate and is therefore an all-year-

round holiday destination From a monocrop economy depending mainly on

sugar it has diversified its economic activities into textile and apparel

industry tourism and financial service Mauritius has witnessed a massive

development in the last decades (SMIDO 2006)

5

Figure 1 Map of Mauritius showing all Provinces

Source Encarta World atlas online

6

Figure 2 Mauritius map showing political divisions of the country

Source Maps of the world online

The research area was around the capital city Port Louis marked in red For

anonymity the site was just called A or B Administratively Mauritius is divided

into nine Provinces (figure 2)

The country is remarkable in its ethnic diversity It forms a unique mosaic of

immigrants from the Indian sub-continent Africa Europe and China The

cultural diversity and harmony of the island make Mauritius a unique place in

the world The various religions found on Mauritius tend to play a major part in

7

the islands cultural events and churches temples and mosques are to be

found everywhere Hindus make up approximately half of religiously affiliated

Mauritians followed by Muslims and Christianity as the minority It is also

known for its social peace political stability and racial harmony Its steady

economic growth over the years coupled with its nation‟s social cohesion and

prosperity ensure continuing development (Country Profile 2005)

The country is equipped with a highly skilled labour force to suit virtually all

business in two international languages English and French and a very good

infrastructure thereby attracting Foreign Direct Investment The average

economic growth was 56 over the last 3 years The income per Capita has

reached 4000 US Dollars As a result the standard of living has gone up The

country has now a life expectancy rate of 714yrs an adult literacy rate of 83

(Country Profile 2005)

To face globalisation and a new economic environment the Government has

taken several steps High value-added capital intensive and knowledge-

based activities are on the priority list The Information Technology sector is

undergoing rapid changes so as to be fit for the next millennium The aim is to

make Mauritius a centre for high-tech and software services which can be

exported (Commonwealth Secretariat 2006)

8

12 An Overview of Mauritian Economy

The economy of Mauritius has experienced major structural transformation

over the last two decades The country has moved away from a mono-crop

economy with fast population growth high unemployment and low per capita

income to one that is more dynamic and diversified The sources of

diversification have been agriculture export manufacturing (mainly textile)

tourism and more recently international services with Offshore and Freeport

activities (Country profile 2005)

To respond to the global competition in these sectors Mauritius has made

extensive use of modern technology to improve its productivity and efficiency

The real growth rates have been around 54 over the past four years and

Mauritius is now classified as a middle-income country and is one of the

healthiest economies in the whole African region (Country profile 2005) The

sugar sector provided the start-up capital for the Export Processing Zones

(EPZ) The rapid rate of growth of investment in the manufacturing sector

(investment grew by over 30 each year from 1983 until the late 1990s in this

sector) that led to the success of the EPZ and the Mauritian economy as a

whole This was made possible by the confidence of entrepreneurs and

foreign investors prevailing in the country at that particular time The private

sector accounts for approximately 70 of total capital formation in Mauritius

Investment rate stood around 27 in the four years ending 1996 peaking to

30 in 1994 (SMIDO 1996)

9

When the government recommended the diversification of the economy with

the creation of Export Processing Zones in the early 1980‟s the EPZ sector

benefits from duty-free and quota free access into European Union markets

granted under the Lomeacute Convention as well as tariff preferences granted

under the General System of Preferences (GSP) by countries such as North

America and Japan The mid 1980s witnessed a textile boom raising per

capita incomes and living standards However the conclusion of the Uruguay

Round (General Agreement on Trade amp Tariffs) implies the loss of guaranteed

markets and preferential access which will result in strong competition in

these respective markets (Country profile 2005)

The new strategy of the industrial sector aims at targeting high quality and

high value added products with a view to restoring the competitiveness of the

goods by applying latest technology to the manufacturing industry and hence

improving the quality of the finished products Limited data is available

regarding the SME sector in Mauritius The current research has observed

that there is little research in the field in SME sector in Mauritius

In view of the importance of foreign investment as a source of sustenance to

economic growth the government of Mauritius has taken a series of policy

measures to encourage its flows into manufacturing offshore banking and

financial services information technology communication and tourism As far

as foreign investors are concerned Mauritius offers itself as an attractive

destination because several positive features such as political stability

10

availability of skilled labour and investment-friendly rules and institutions

(Stone 1997)

With such a promising economy there is virtually no evidence on how to

penetrate the business culture in Mauritius and how culture can affect SMEs

and business opportunities therefore this study will explore and understand

the business environment in Mauritius and the challenges of doing business

there as a foreign investor Currently there is very little research done on

SMEs and culture in Mauritius

13 Mauritius SME Background

Experience shows that attitudes towards small business vary from decade to

the next from country to country Before the industrial revolution all business

was small business but with industrial and commercial expansion of

developed nations small has become medium and medium has become big

business

Business owners and managers have often seen growth as an end in itself

and at time the cry get big or get out has been heard in most nations

(Meredith 2004) For more than two decades SMEs have experienced

favourable growth SME has long been prominent in the countrys economy

and make up a large portion of national economy in terms of output

employment and effective utilisation of regional resources Small and medium

enterprises in Europe make up 998 of all European enterprises provide

66 of its jobs and account for 65 of its business turnover (Meredith 2004)

11

In developing countries SMEs account more than 90 of all enterprises

Over the last five years they have been responsible for more than 80 of job

created (Stone 1997) On the issue of job creation Stone (1997) found that

SMEs create more employment than large enterprises and with a lower

investment per job created SMEs are not usually associated with international

activity but they do in fact play a significant international role and their

importance appears to be increasing Available data on SMEs international

activity are very limited (Stone 1997)

In general terms and depending on the country SMEs contribute between

15 and 50 of exports and between 20 and 80 of SMEs are active

exporters Overall it is estimated that SMEs now contribute between 25 and

35 of world-manufactured exports (UN 2005) Increased exports not only

boost the level of sales and employment but also extend the life cycle of

goods and services

In Mauritius SMEs represent 19 according to a report issued by the

Commonwealth Secretariat entitled a Study of Small Firm export Policies

and Institutions in Mauritius Subsequently these SMEs have developed

gradually and move from their tradition orientated operations to export-led

firms probably due to improvement of technology in the field of communication

and the new economic dimension which prevailed

At this juncture it is important to report that few studies on culture and small

and medium entrepreneurship have been conducted on Sub-Saharan Africa

12

There is a paucity of information and even those scarce studies they do not

cover broad perspectives of the situation of SMEs in Sub-Saharan Africa

Therefore this study builds upon the existing limited body of research

regarding how business cultures contribute to the success or failure of small

and medium entrepreneurs In particular it explores the business culture in

Mauritius and its barriers to penetration for new and foreign small and

medium entrepreneurs

14 Purpose Statement

The purpose of this study was to understand the concept on how to penetrate

an international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

15 Aims and Objectives

To investigate the challenges of national cultural differences in

business in Mauritius

To investigate how to penetrate the business environment for a new

and or foreign business culture especially in Mauritius

To investigate business opportunities for SMEs in Mauritius and how

these can benefit the locals

13

16 Research Question

How can Small and Medium Enterprises penetrate the business culture in

Mauritius

These sub-questions all pertain to SMEs business

o 161 SUB-QUESTIONS

What kind of businesses are operating in Mauritius now

What are their business strategies (marketing brands) etc

What are the necessary mechanisms for establishing business in

Mauritius

What are the business needs of established and starting businesses

What are the mechanisms for potential growth of local business

What are the challenges for doing business in Mauritius

How much of business behaviour is influenced by the national culture

17 The Significance of the Study

The findings of the current study will increase the understanding of cultural

barriers to market penetration for SMEs in Mauritius The study adds

knowledge to the body of literature in this area focusing at further

improvement of understudying of culture and business issues The

study becomes part of the universitys education development in line with its

obligations to the communities and the country This research problem arose

from an information need of a particular client This research therefore will try

to explore the client‟s information need and probably contribute to the wealth

of knowledge

14

18 Definitions

CULTURE Hofstede (1997) defines culture as ldquothe collective programming of

the mind which distinguishes the members of one group or category of people

from anotherrdquo It is the norms beliefs and values common to a society

Culture is about the way people understand their world and make sense of it

It only when this is taken for granted assumptions are challenged that people

realise that they even exist (Hofstede 1997)

ENTERPRISE An enterprise is considered to be any entity engaged in an

economic activity irrespective of its legal form This includes in particular

self-employed persons and family businesses engaged in craft or other

activities and partnerships or associations regularly engaged in an economic

activity (European Commission 2003)

INTERNATIONAL BUSINESS International business consists of transactions

that are devised and carried out across national borders to satisfy the

objectives of individuals and organizations The Primary Types of International

Business Activities Are Importing and Exporting Direct Foreign Investment

(Govindarajan and Gupta 2001)

GLOBALISATION refers to a bdquogrowing economic interdependence among

countries as reflected in the increased cross-boarder flow of three types of

entities goods and services capital and knowhow‟ (Govindarajan and Gupta

2001 4)

15

SMALL AND MEDIUM INTERPRISES (SME) is made up of enterprises

which employ fewer than 250 persons and which have an annual turnover not

exceeding EUR 50 million andor an annual balance sheet total not

exceeding EUR 43 million (European Commission 2003)

In Mauritius an SME has been redefined taking into account the volume of

investment in equipment which was previously one million up to 10 millions

Mauritian Rupees presently to be classified as a small enterprises and with

less than 50 and 200 employees for small and medium scale respectively

(Stone 1997)

16

CHAPTER TWO

LITERATURE REVIEW

The aim of this chapter is to introduce conceptual themes that are important in

order to understand the role of culture in international business The chapter

discusses the context of relationship between culture and international

business practices in small and medium enterprises (SMEs) and the major

challenges they face in the area of globalisation A model adopted from Putz

(2000) forms a framework for articulating the conceptual role that culture has

in international business using Mauritius as a case study

21 Embracing Cultural change in an era of globalization

A significant theoretical issue for international business is the role of culture in

the whole aspect of information transformation Since the landmark study by

Haire et al (1966) and the publication of Industrialism and Industrial Man by

Kerr et al (1960) researchers have continued to search for similarities in

culturally specific beliefs and attitudes in various aspects of work related

attitudes as well as consumption patterns and other behaviours If cultures of

the various communities of the world are indeed converging (Heuer et al

1999) International Business (IB) related practices would likely become

increasingly similar For example standard culture-free business practices

would emerge and inefficiencies and complexities associated with divergent

beliefs and practices in the past era may disappear (Heuer et al 1999)

17

Studies elsewhere suggest that culture gets affected by globalization practices

in the current 21st century Globalization has seen flows of information

technology money and people and is conducted via international

government organizations such as the African Union the North American

Free Trade Agreement (NAFTA) and the European Community global

organizations such as the International Organization for Standardization

(ISO) multinational companies (MNCs) Also includes cross-boarder alliances

in the form of joint ventures international mergers and acquisitions These

interrelationships have enhanced participation in the world economy and

have become a key to domestic economic growth and prosperity (Drucker

1995 153)

Literature suggests that because globalization tends to redistribute economic

rewards in a non-uniform pattern a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) Strong opposition to

globalization usually originates from developing countries that have been

affected by the destabilizing effects of globalisation However in recent years

there have been heated debates in Western economies triggered by

significant loss of professional jobs as a result of offshoring to low wage

countries (Schaeffer 2003)

Workers in manufacturing and farming in advanced economies are becoming

increasingly wary of globalization as their income continues to decline

18

significantly In parallel to the angry protests against globalization the flow of

goods services and investments across national boarders has continued to

fall after the rapid gains of the 1990s The creation of regional trade blocs

such as NAFTA the European Union and the Association of Southeast Asian

Nations have stimulated discussions about creating other trade zones

involving countries in South Asia Africa and other parts of the world

Although it is often assumed that countries belonging to the World Trade

Organization (WTO) have embraced globalization the fact is that the world is

only partially globalized at best (Schaeffer 2003)

Many parts of Central Asia and Eastern Europe including the former

republics of the Soviet Union parts of Latin America Africa and parts of

South Asia have raised heightened scepticism about globalization (Greider

1997) In fact less than 10 of the world‟s population are fully globalized (ie

being active participants in the consumption of global products and services)

(Schaeffer 2003)

According to Guile`n (2001) these trends might indicate that globalization is

being impeded by tendencies towards country-specific modes of economic

development making the convergence of IB-related values and practices

difficult to achieve Hofstede (1980)‟s favourite definition of f ldquoculturerdquo is

precisely that its essence is ldquocollective mental programmingrdquo it is that part of

peoples conditioning that they share with other members of their nation

region or group but not with members of other nations regions or groups

Hofstede (2001) asserts that these mental programs of people around the

19

world do not change rapidly but remain rather consistent over time His

findings tend to suggest that cultural shifts are relative as opposed to

absolute Although clusters of some countries in given geographical locales

(eg Argentina Brazil Chile) might indicate significant culture shifts towards

embracing Anglo values the changes do not diminish the absolute differences

between such countries and those of the Anglo countries (ie US Canada

UK)

According to Hofstede (1980) Examples of differences in mental

programming between members of different nations can be observed all

around us One source of difference is of course language and all that

comes with it but there is much more In Europe British people will form a

neat queue whenever they have to wait not so the French Dutch people will

as a rule greet strangers when they enter a small closed space like a railway

compartment doctor‟s waiting room or lift not so the Belgians Austrians will

wait at a red pedestrian traffic light even when there is no traffic not so with

the Dutch Swiss tend to become very angry when somebody-say a foreigner

makes a mistake in traffic not so with the Swedes All these are part of an

invisible set of mental programs which belongs to these countries‟ national

cultures Such cultural programs are difficult to change unless detaches the

individual from his or her culture Within a nation or a part of it culture

changes only slowly (Hofstede 1980)

20

This is the more so because what is in the minds of the people has also

become crystallized in the institutions namely government legal systems

educational systems industrial relations systems family structures religious

organizations sports clubs settlement patterns literature architecture and

even in scientific theories All these reflect traditions and common ways of

thinking which are rooted in the common culture but may be different for other

cultures (Hofstede 1980)

22 The dynamics of Culture as a Multi-level Multi- layer construct

Multi-level approaches of viewing culture as a multi-level construct that

consists of various levels nested within each other from the most macro level

of a global culture through national cultures organisational cultures group

cultures and cultural values represented the self aspect of the individual See

figure 3

21

Figure 3 The dynamic of top-down-bottom up process across levels of

culture (Source Schein 1992)

The model proposes that culture as multi-layer construct exist at all levels

from global to the individual Changes that take place at the external layer of

behaviour are most likely shared by individuals who belong to the same

cultural background level hence characterising the aggregated unit (Schein

1992)

Top-

Down

Individual

Behaviour

Values

Assumptions

Global Culture

National Culture

Organizational Culture

Group Culture

Bottom

Up

22

Below the global level are nested organizational layers or networks at the

national level with their local cultures varying from one nation or network to

another Further down are local organizations and although all of them share

some common values of their national culture they vary in their local

organizational cultures which are also shaped by the type of industry that

they represent the type of ownership the values of the founders etc Within

each organization are sub-units and groups that share common national and

organizational cultures but differ from each other in their unit culture based on

differences in functions of their leaders‟ values and the professional and

educational level of their members At the bottom of this structure are

individuals who through the process of socialization acquire the cultural values

transmitted to them from higher levels of culture Individuals who belong to the

same group share the same values that differentiate them from other groups

and create a group-level culture through a bottom-up process of aggregation

of shared values (Schein 1992)

Both top-down and bottom-up processes reflect the dynamic nature of culture

and explain how culture at different levels is being shaped and reshaped by

changes that occur at other levels either above it through top-down

processes or below it through bottom-up processes(Schein 1992) Similarly

changes at each level affect lower levels through a top-down process and

upper levels through a bottom-up process of aggregation The changes in

national cultures observed by Inglehart and Baker (2000) could serve as an

23

example for top-down effects of economic growth enhanced by globalization

on a cultural shift from traditional values to modernization

In view of the complexity of the organizational structures specific

organizational structures that have global character need to be established so

as to adopt common rules and procedures in order to have a common

bdquolanguage‟ for communicating across cultural borders (Kostova 1999 Kostova

and Roth 2003 Gupta and Govindarajan 2000)

Given the dominance of Western Multi National Companies (MNCs) the

values that dominate the global context are often based on a free market

economy democracy acceptance and tolerance of diversity respect of

freedom of choice individual rights and openness to change (Gupta and

Govindarajan 2000) The multi-level structure explains how a lower-level

culture is being transformed by top-down effects and that the cultural layer

that changes first is the most external layer of behaviour In the long run

bottom-up processes of shared behaviours and norms would affect the local

organizational culture as well (Schein 1992)

23 International Business and Culture

Knowledge of cultural differences is one of the key components in

international business practices and success Improving levels of cultural

awareness can help companies build international competencies and enable

individuals to become more globally sensitive (Hofstede 2003) Indeed

cultural differences contribute towards different ways people behave in

24

business Research in the field of international management underscores that

the attributes of cultural knowledge used by a firm play an important role in the

firms expansion For example Martin and Salomon (2003) found that cultural

orientation in entrepreneurial action is a central theme and can serve as a

starting point for immigrant business

ldquoUnderstanding the culture and the conceptualisation of culture in conjunction with entrepreneurial action is a critical issue when doing business in an international environment Contributions of economic geography inspired by the cultural turn which shows alternative ways of thinking about the connection between culture and economy by using a new understanding of culture are also critical (pg 198)rdquo

The statement underscores the important of understanding the culture of a

society before attempting to do business there otherwise the company runs a

risk of going out of business The ways in which different groups of people

interpret their environment and organise their activities is based the on the

specific cultural values and assumptions Certain values often thought to be

universal really do differ from culture to culture What constitutes an ethical

business practice is not the same everywhere This can be an enormously

difficult area in managing business across cultures (Straub et al 2002)

Although one may claim cultural differences to be going away they are

actually being absorbed in the business practices This makes it more critical

than ever to try to understand different cultures and their influence on the

ways people do business and view the world The costs of not understanding

are getting greater than ever The essence of culture is not what is visible on

the surface It is the shared views about what people understand and interpret

25

the world These cultural differences are crucial influences on interactions

between people working and managing across culture (Gertler 1997)

The social behaviour of a society is embedded in a particular context and is

connected to other deeply held values and beliefs (Weisinger and Trauth

2003) This means that the stakes are high for mismanaging cultural

differences Ignoring or mishandling differences can result in an inability to

retain and motivate employees a misreading of the potential of cross-border

alliances marketing and advertising blunders and failure to build sustainable

sources for competitive advantage Mismanaging cultural differences can

render otherwise successful managers and organisations ineffective and

frustrated when working across cultures (Weisinger and Trauth 2003)

24 Putz Model For Immigrant Business and Culture

Literature in the field of Immigrant Business differentiates mainly between two

basic approaches each with a different emphasis which are combined to

explain entrepreneurial action of immigrants (Putz 2000) The first approach

emphasis the bdquoopportunities‟ offered by the host country including access to

the market and job market conditions The second approach focuses on the

bdquoresources‟ of migrant groups from whom the concept of culture becomes

essential (see Figure 1 below)The Putz (2000) cultural model below is a

summary of explanatory approaches following the assumption that self

employment of certain groups is the result of their specific cultural

predisposition which favours business activity

According to Putz‟s (2000) view of cultural model the bdquoopportunities‟

approach which refers to market possibilities as an explanation for self

26

employment of immigrants assume that there are certain market segments

with favourable development perspectives especially for immigrant groups

Here two factors receive special attention which are niche markets and legal

and institutional frameworks Niche markets make the establishing of business

by immigrants easier because their needs for consumer goods create specific

demand Legal and institutional frameworks gain awareness in international

comparative studies through restrictions specified by a country regarding

business permits and regulations these frameworks influence both the extend

and the sectored structure of the bdquoimmigrant business‟ (Putz 2000)

According to Putz (2000) the observation that most immigrant groups show a

higher level of self employment rate than others often forms the background

explanation which focus on opportunities created by the host society

Resource models stress the shared characteristics of migrants of same origin

Resources models explain that certain groups have specific cultural

resources which make it easier for members of that group to become self

employed therefore one can distinguish between the cultural traditions and

socialethnic networks ( Putz 2000)

27

Figure 4 Dominating models concept of bdquoImmigrant Business‟ (Source Putz

2000)

OPPORTUNITIES

Market Access

Possibilities

Market Conditions

Niche Markets

lsquoOpenrsquo Markets

Job Market

Conditions

Access

Vertical Mobility

Legal and Institutional

Frameworks

lsquoEthnicrsquo

Business

RESOURCES

lsquoClass Resourcesrsquo lsquoCultural Resourcesrsquo

Cultural

Traditions

Social lsquoEthnicrsquo

Resources

28

When successfully managed differences in culture can lead to innovative

business practices faster and better learning within the organisation and

sustainable sources of competitive advantage (Sondergaard and Hofstede‟s

1994) In relation to that the current study argues that managers need to

study and understand the culture and the niche market before investing This

assumption has been raised as a result of the previously reported experiences

and research findings already reported so far It is therefore critically important

to understand that every society has got its own way of behaving which needs

to be understood if the business is to succeed Operating companies need to

understand what their business means to the people of the given community

and their culture

Several studies of international business have indicated that

internationalization of the firms is a process in which the firms gradually

increase their international involvement(Johanson amp Wiedersheiml 1995

Gibson 1999 Chui et al 2002 ) It seems reasonable to assume that

within the frame of economic and business factors the characteristics of this

process influence the pattern and pace of internationalization of firms Figure

5 below shows a model of the internationalization process of the firm that

focuses on the development of the individual firm and particularly on its

gradual acquisition integration and use of knowledge about foreign markets

and operations and on its successively increasing commitment to foreign

markets The basic assumptions of the model are that lack of such knowledge

is an important obstacle to the development of international operations and

that the necessary knowledge can be acquired mainly through operations

abroad (Johanson and Wiedersheiml1995)

29

FIGURE 5 The Basic Mechanism of Internalisation- State and Change Aspects

Figure 5 Basic Mechanism of Internalisation (Source Johanson amp

Wiedersheiml 1995)

Market knowledge and market commitment are assumed to affect both

commitment decisions and the way current activities are performed These in

turn change knowledge and commitment ( Aharoni 1966) In the model it is

assumed that the firm strives to increase its long-term profit which is

assumed to be equivalent to growth (Williamson 1966) The firm is also

striving to keep risk-taking at a low level These strivings are assumed to

characterize decision-making on all levels of the firm Given these premises

and the state of the economic and business factors which constitute the frame

in which a decision is taken the model assumes that the state of

internationalization affects perceived opportunities and risks which in turn

influence commitment decisions and current activities (Johanson amp

Wiedersheiml 1995)

Market

Knowledge

Market

Commitment

Commitment

Decisions

Current

Activities

30

2 5 The Role Of Information Communication Technologies

Hofstede (2001) observed that not only will cultural diversity among countries

persist but also new technologies might even intensify the cultural differences

between and within countries Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

Information communication technologies (ICTs) enable users to access varied

amounts of information globally however it does not necessarily increase

their capacity to absorb the information at the same rate as the information is

disseminated or diffused (Bhagat et al 2002) In addition information and

knowledge are interpreted through cultural lenses and the transfer or diffusion

of organizational knowledge is not easy to accomplish across cultural

boundaries (Bhagat et al 2002)

Ethnic groups around the world observe the lifestyles and cultural values of

other countries and some are interested in adopting part of the lifestyle and

values but others reject it completely (Kirkman and Shapiro 2000) The

effects of new technologies on improving efficiencies of multinational and

global corporations are well known but it is not known how these new

technologies especially computer-mediated communication and the Internet

31

might create significant shifts in the cultural patterns of different ethnic groups

(Kirkman and Shapiro 2000) or on their ways of doing business

In essence there in need to explore how the spread of ICTs is affecting the

progress of globalization in different parts of the world by incorporating the

role of cultural syndromes organizational cultures and other processes

which has recently been attempted by scholars such as Bhagat et al (2003)

and Gibson and Cohen (2003)

Information and Communications Technology (ICT) has become a catchword

with different interpretations and viewpoints even among experts As the

name suggests ICT encompasses all the technology that facilitates the

processing transfer and exchange of information and communication

services In principle ICTs have always been available since the advent of the

printing press The only difference is that from the late twentieth century rapid

advances in technology changed the traditional ways in which information was

processed communications conducted and services available (Adu 2002)

These technological advances have changed business operations and the

way people communicate They have introduced new efficiencies in old

services as well as numerous new ones One could even imagine going as far

as replacing the term Post-industrial Society with ldquoInformation Society that

is a society where the ability to access search use create and exchange

information is the key for individual and collective well-being (Kaplan 2001)

32

Globally entrepreneurship is considered as the engine of economic

development The SME sector has the potential to address socio-economic

challenges facing both developing and developed countries Without small

business development it is argued that economies stagnate unemployment

levels continue to rise and the general standard of living deteriorates

Information and communications technology (ICT) has been identified as a

major area of need to develop the SME sector in areas of information

provision access to national and international markets and other areas of

business development and support ( Ferrand and Havers 1999)

ICTs enable entrepreneurs to manage their businesses efficiently and thus

enhancing their competitiveness in the global market They can increase their

geographic reach improve efficiency in procurement and production and

improve customer communications and management For these reasons the

need to encourage and accelerate the uptake and optimal application of ICTs

by SMEs in different sectors of the economy cannot be overemphasized

(Ramsay et al 2003) The ICT sector has the potential to absorb prospective

entrepreneurs considering various business opportunities offered by the

sector Some of the business opportunities available within the sector relate to

systems integration application development database administration web

design and internet service provision The sector is also seen as an area with

major opportunities for the historically disadvantaged sectors of the

population It therefore becomes imperative for government to provide

mechanisms to accelerate the entry of SMMEs into the ICT sector (ILO 2001)

33

26 Cross Culture and International Business

Cross-cultural management advice rests on several assumptions in the

tradition of Hofstede (1997) that a) that national culture is comprised of norms

and values that can be readily identified and addressed b) that these norms

values and patterns of behaviour are stable and change at an extremely slow

pace and c) that national culture predominates over organizational culture

epistemic culture gender or other determinants of attitudes and behaviour

According to Hosftede (1997) national culture is comprised of norms and

values that can be readily identified and addressed

Organisational culture (common values and attitudes) affects organizational

success and innovation develops over time and may be difficult to change

ldquoThere is a relationship between an organization‟s culture and its

performance The pervasive nature of organizational culture means that if

change is to be brought about successfully this is likely to involve changes to

culturerdquo (Mullins 1999)

An alternative view sees culture as more complex context-specific and

dynamic For example Weisinger and Trauth (2003) examined the interaction

of national cultures the IT industry culture and a particular firm‟s

organizational culture They observed that the resulting situated culture ldquois

fluid contextually dependent and created by actors within a group who may

hold conflicting assumptions and world viewsrdquo In other words culture is as

what it is because of what it does This means that management must ensure

34

that key capabilities for example marketing analytics or process controls are

developed and nurtured across the organization

Successful global managers recognize that they cannot respond to every

unique opportunity that local settings offer Thus there is an inherent tension

in cultural sensitivity a management team which is ldquotoo sensitiverdquo to cultural

and structural features exposes the organization to the risks that come with a

lack of focus and coherence while managers who do not take cultural and

structural features into account expose the organization to the risks that come

with organizational rigidity (Myres and Tan 2002)

According to Mistry (1999) entrepreneurial networks and clusters in sub-

Saharan Africa have not generally produced the kind of strong transnational

links that characterize Asia‟s flourishing pattern of industrial diffusion The

author states that the reasons for this are complex differences in geography

different models provided by leading countries in the neighbourhood and

policies adopted by governments in the respective regions Chinese business

networks are responsible for some of the information ideas and capital that

helped launch the small Indian Ocean nation of Mauritius as an important

centre for export-oriented industry The Chinese networks in Mauritius also

continue to facilitate a role that Mauritius first began to play in the eighteenth

century they serve as a gateway for overseas Chinese entrepreneurs

interested in investing both in Mauritius and elsewhere in Africa (Mistry 1999)

35

27 Investing in Mauritius

There are a lot of advantages in investing in Mauritius The economy of the

country is stable and the graph of the economy and business is one the rise

for a considerable period of time The Mauritius government has undertaken a

sequence of strategic measures to support its course into offshore banking

manufacturing and financial services communication technology and tourism

keeping in mind the significance of foreign investment as a basis of

nourishment of the financial development (Dabee and Greenaway 2001)

According to Dabee and Greenaway (2001) tthere are various factors that

influence financiers to invest in Mauritius like accessibility of skilled labor

political constancy and venture-friendly institutions and regulations One of

the major factors for the development of Mauritius is the Foreign Direct

Investment (FDI) The government of Mauritius has given all the necessary

support to create the most favorable investment setting by the following steps

Building modern infrastructure

Endorsing suitable legislations

Commencing packages of investment inducements

Investing in human capital

Some of the advantages of investing in Mauritius are as follows

High-quality infrastructure with superb transportation

Democracy and a steady government

Free market financial system fastened on export slanting activities

Excellent system of sea and air transport

36

High standard of living good international schools

A highly educated bilingual and responsive work force

Knowledgeable financial segment providing outstanding services

Constructive market contact and good inducements ( IBP 2002)

Mauritius has various sectors where investment can be made like Information

and Communication Technology and manufacturing For doing business in

Mauritius registered trademark is required The trade marks for business are

issued by the registered Patents and Trademarks sector of Ministry of Foreign

Affairs International Trade and Cooperation In the country of Mauritius a

foreigner is eligible to hold 100 shares In this case one of the directors of

the company has to inhabit in Mauritius and the foreign individual has to

obtain a sanction from the Office of Prime Minister (IBP 2002)

In Mauritius the laws concerning income tax is based on the English law of

income tax The companies in Mauritius are lawfully accountable to pay out

income tax on their profits at an even rate of 25 A company which is

included in the country or has its scheming benefit in the country is measured

for tax reasons to be an occupant corporation To the Mauritius companies

various types of tax incentives are granted The companies that hold

certificate for Tax inducement are responsible to tax at an abridged rate of

15 while the scheduled companies are accountable to pay tax at the rate of

25 ( Dabee and Grrenaway 2001)

37

CHAPTER THREE

METHODOLOGY

Having looked at culture to some depth this chapter explains the methods

used in carrying out the study The study used mixed method approach to

allow for data corroboration and dynamism since the subject in question

needed dynamism and sensitivity in approach

This research mixed both qualitative and quantitative approaches to try and

get best possible research by combining both features because they

complement each other Quantitative data techniques condense data in order

to get a bigger picture whereas qualitative techniques are data enhancers

making it possible to see issues more clearly (Dawson 2002 Neuman 2000)

Attempt was made to keep in line with recommendation made in the Leeds

Declaration proposition number 6 which calls for the application of multiple

methods and perspectives to try and understand social and cultural issues

(Hunter and Lang 1993) Mixing qualitative and quantitative methods also

called positivist and interpretive respectively (Gilbert 2001 and Bowling 2002)

is effective in a complex issue study such as this one because they highlight

different perspectives of the same problem in this case - the public in parallel

with the individual level(Gilbert 2001) This is because quantitative methods

adopt a numerical approach to data collection and analysis to provide macro

level perspective whereas qualitative methods provide micro level perspective

through collecting data from individuals (Ibid)

38

There was also use of impersonal (public) documentation using official

records which were more library based research (Grbich 1999) on top of

theory generating field based methods (Ibid) Many researchers (Bowling

2002 Neuman 2000 Grbich 1999 Denscombe 2003 and Gilbert 2001)

concur that neither of the methods is superior to the other but just different

each having its strengths and weaknesses (Dawson 2002)

The study sought to explore the attitudes behaviour subjective meanings and

experiences of the participants making qualitative approaches best suited

because they emphasize the importance of context (Neuman 2000) However

to generate objective and factual (Maynard and Purvis 1994) statistical

figures quantitative research was more suitable Hence mixing of methods

(Dawson 2002 Denscombe 2003) to counteract weaknesses in both

approaches to give breadth and width to the study (Maynard and Purvis

1994) The flexibility of qualitative research allowed for re-focusing and

refinement of the tool dependent on participants‟ reactions throughout

(Neuman 2000) to pick up any emerging evidence thus applying the

grounded theory approach (Dawson 2002)

39

31 Research Setting

Mauritius is a volcanic island of lagoons and palm-fringed beaches in the

Indian Ocean Southern Africa east of Madagascar with a population of

about 12 million has a reputation for stability and racial harmony among its

mixed population of Asians Europeans and Africans The island has

maintained one of the developing worlds most successful democracies and

has enjoyed years of constitutional order since independence in1968 Over

the past three and half decades the country has been transformed from one

of the poorest in the world to a middle income country with per capita Gross

Domestic Product US $7000 (World Bank 2006) It has preserved its image

as one of Africas few social and economic success countries that mainly

depends on sugar and clothing export and a centre for upmarket tourism But

Mauritian exports have been hit by strong competition from low-cost textile

producers and the loss of sugar subsidies from Europe Consequently

attention has turned to diversification in line with global trends

To this end SMEs have been identified as important instruments to achieve

economic diversification Today the government vigorously supports SMEs

through a range of strategies eg the creation of a business friendly climate

via import liberalisation tax reforms and the launch of the SME Partnership

fund which gives subsidized loans to aspirant SME owners and makes the

availability of finance and facilitating access in particular for those enterprises

that have viable projects but are short of equity The Small Enterprises amp

Handicraft Development Authority (SEHDA) was created following the merger

of the Small amp Medium industries Development Organisation (SMIDO) and the

National Handicraft Promotion Agency (NHPA) The aim of the merger is to

40

rationalize and optimize the use of resources dedicated to the small business

sector in Mauritius

Various cultures and traditions flourish in peace though Mauritian Creoles

descendants of African slaves who make up a third of the population live in

poverty and complain of discrimination Mauritius was uninhabited when the

Dutch took possession in 1598 Abandoned in 1710 it was taken over by the

French in 1715 and seized by the British in 1810 The culture of the country

reflects its diverse ethnic composition There are many religious festivals

some important ones being (in random order) Divali (the hindu festival of

lights in October) Christmas Cavadee (a penitence festival of the south

Indian tradition of hinduism in January) Eid ul Fitr (celebrating the end of the

period of fasting in Islam As the Islamic calendar does not correspond to the

Gregorian calendar the date of its celebration in the year tends to vary In

2003 it was celebrated in November) With such a strong history diverse

culture and such a promising economy painted above makes Mauritius a rich

setting to investigate culture and small medium business entrepreneurship

32 Methods

As justified already this study applied method mix to exploit the benefits of all

methods used while minimising the effects of their weaknesses The obvious

benefit of method mix is that it involves more data which is likely to improve

the quality of research (Denscombe 2003) and that is what the researcher

sought to achieve In deciding which method to use it was acknowledged that

the chosen methods were not superior in any way but more suited to the study

41

circumstances based on the premise of ldquohorses for courses (Denscombe

2003 page 83)

A Questionnaire used in the online web survey allowed for collection of

data from large numbers of participants economically since the project had

financial and time limitations (Ibid) The other advantage of survey exploited is

generation of quantitative data However weaknesses of the method

(empiricism lack of depth and accuracy of responses) were a challenge The

questionnaire was open ended and was completed by the participant in the

absence of the researcher Any questions arising from the participant not

understanding or misinterpreting the question where not taken care of Focus

groups were used to gain depth into some of the emerging issues from

questionnaires to gain insights into the issues surrounding widow inheritance

and to validate some of the data (Denscombe 2003) Telephone and face to

face interviews were used to gather to gain in-depth information on the

issues

All accessible literature on culture and investment in Mauritius as well as

other parts of Africa was reviewed to get insight into any related work to

identify key issues and current knowledge gap so as to sign post this study for

any audience (Ibid)

42

33 Research Participants and sampling

It was difficult to get exact demographic data for each sector Consequently it

was not possible to use any scientific sampling techniques The study

therefore used non-probability sampling (Neuman 2002 Bowling 2002

Denscombe 2003) targeting urban based population

The sample baseline characteristics were

SME managers from aged 18 years and above and over 65 was the

limit Any religion faith Any socio-economic background and residents

of Port Luis and surrounding areas

To sample for quantitative data purposive and snowballing sampling

techniques were used because it was not possible to apply any statistical

formula in getting the samples since there was no single list of SME managers

and other stakeholders to use with any form of probability sampling

Participants were snowballed from one sector to another until the whole

sectors were covered For the focus groups homogenous and critical case

(Grbich 1999) sampling was used to get particular sub group to provide

details In this case to get government officials and the private sector who

were strong enough to talk about their experiences

A total of 161 participants were reached from all the sectors These included

SME manager government officials and the private sector The researcher

wishes to point out that these numbers were not conclusive The numbers

could be much higher because in case the researcher phoned the participants

they were not available to take the call there was no time to go back to

43

ascertain the details Those who were not willing to take part in the study were

also excluded from the above figures For the focus groups discussions 5

government officials and the private widows were invited and used Skype

technology to do a conference

The times when the participants were contacted met were entirely dependent

on participant availability and other events at the time (Gilbert 2001) It varied

between 800 am and 700 pm in the evening because of the time differences

UK and Mauritius time Care was taken to avoid compromising times such as

late in the evening or culturally sensitive days such as weekends when people

were engaged in funerals and church services in this case

The participants showed weariness towards the study because as they put it

ldquoa lot of people come along claiming to collect data to help but never show up

againrdquo

34 Data collection Instruments

The researcher developed an online quantitative data collection questionnaire

(web survey form) which was posted on the university web server with help of

the department technicians A multiple recipient list was created from the

details in the SEHDA website and was randomly sent to the recipients These

only included the SME managers from the seven sectors About 20 contacts

were selected from each sector which made a total of 140 participants

Telephone interviews were made to about 17 government officials and the

private sector who were later divide n to focus groups and a teleconferencing

44

was organised on Skype Face to face interviews were done with government

officials from the Mauritian High Commission in the UK

Apart from the questionnaire an Olympus VN 2100 PC Digital Voice Recorder

was also used during the focus group discussion with the permission of

participants also on telephone interviews and face to face interviews This

was tested set and correctly positioned by the telephone speaker before the

session began to ensure proper functioning It was fitted with a mini

microphone to improve recording quality The digital voice recorder small in

size (only 68 grams in weight) proved user friendly because it was not

intruding too much into the face of participants as opposed to older recording

devices There was a pair of AAA batteries on standby in case the batteries in

use ran flat during the session

35 Ethical Considerations

This study involved very little of sensitive issues but it strived very much to

adhere to the fundamental principles of Human Research Ethics of Respect

for Persons Beneficence and Justice The researcher ensured autonomy self

determination and protection of vulnerable persons through informed consent

participation confidentiality and thorough explanation of what the research

was all about to those with limited knowledge and education Any risk that

might have resulted from the study was minimised as much as practically

possible and the researcher took full responsibility for the protection of

participants There was no form of discrimination other than on participant

baseline characteristics

45

The study also upheld the six key ethical research principles as stipulated by

ESRC - UK (ESRC 2005) To ensure anonymity pseudonyms were used for

participants The information gathered was safely protected through password

use on the computer system and only the researcher had access to the

information The researcher was responsible for storage and destruction of

any information no longer needed such as audio files after transcription

Research respondents participated in a voluntary way free from any coercion

and free to withdraw at any point should they felt uncomfortable

The first ethical committee whose approval was sought was the University of

Sheffield Ethical committee after which the researcher sought ethical approval

from Mauritian authorities through the relevant ministries It was not straight

forward getting ethical approvals in Mauritian but ultimately the ministry of

SMEs approval was obtained

36 Procedure

After all the necessary approvals were obtained the researcher wrote an

explanatory letter (Grbich 1999) or bdquoparticipant‟s information sheet‟ (appendix

5) which included information on informed consent (Denscombe 2003)

After piloting the tools the researcher started by making calls to make

appointment for interviews As the quantitative data collection went on

recruitment of participants to take part in qualitative aspect was done

simultaneously due to time constraints The researcher used individual

judgement to asses those participants who would be courageous enough to

respond to the questionnaire online and to the interviews The managing

46

director for RCBusiness Support Ltd also provided a number of potential

respondents who were used at the initial stages of the study Each interview

session lasted averagely 50 minutes The researcher went to organise the

teleconferencing for the focus group on Skype which also lasted for average

50 minutes

37 Data Analysis

Since the distinction between quantitative and qualitative research is not

watertight (Denscombe 2003) data analysis embraced both because they

have similarities and differences (Neuman 2000) There was analysis of

words and numbers thus holistic versus specific focus (Denscombe 2003)

The analysis adopted a five stages approach (Denscombe 2007) The first

stage was data preparation followed by data exploration analysis

presentation and finally validation

Though some researchers champion for advanced inferential statistics

(Denscombe 2007) the researcher opted for descriptive statistics for the

quantitative data analysis because they still remain effective ways of data

analysis and presentation (ibid) The research data involved nominal as well

as discrete and continuous data which could effectively be analysed using the

chosen method The data was grouped frequencies were described and

finally any linkages were identified The end product of the analysis process

is presented in the results section in various formats Basic statistical

techniques were used to give the data additional credibility in terms of

interpretations of the findings (Denscombe 2007)

47

For the qualitative data the first thing was to back up the original voice

recorded focus group discussion into a password protected lap top This

ensured not only the security of the data but also a back up in case of data

loss The researcher then listened to the recording several times to familiarise

himself with the data after which transcription took place After that the data

was interpreted and categories themes were identified since thematic

analysis was employed The Putz (2000) model was used as a guide to

finding themes The findings are presented in the results section

38 Planned programme of dissemination

The study findings were disseminated to all relevant stakeholders in print

format including the university as part of the postgraduate degree requirement

in academically fulfilling format Two copies of the report were sent to the

Ministry of SMEs in Mauritius and two copies to the Board of Investment of

Mauritius in the UK as part of the requirements of ethical approval and

research permission granted by the ministry

Finally it was hoped that the report would meet publication requirements so

that it could get a wider audience through a reputable journal

48

39 Time scale

The study was anticipated to take the following breakdown from the time all

ethical approvals and consent were obtained

Table 1 Table showing the study time scale

Stage Time allocation Action item Accountable person

I Weeks 1 - 3 Research set up Sampling and

access to participant negotiations

Angelinah Boniface

II Weeks 4 - 12 Data collection and Analysis Angelinah Boniface

III Weeks 12 - 16 Analysis Report writing and

dissemination

Angelinah Boniface

310 Limitations and Delimitations

This study was not fully funded as such high telephone costs travelling

affected the exercise Only business people in Mauritius both men and women

were interviewed The study covered both local and foreign investors

Participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

49

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

A major limitation is a low response rate of the questionnaire and therefore a

representative sample of the SME population was not achieved Thus any

conclusions made from the analysis of the collected data cannot be

generalized to the broader SME population Bias may have been inadvertently

introduced during interviewing caused from such things as leading questions

50

CHAPTER 4

RESEARCH FINDINGS AND DISCUSSION This chapter aims to discus the research findings from the study The chapter

is divided into two sections the first part presents and discusses the

quantitative data and the second part discusses qualitative It is therefore

worth mentioning that the Putz (2000) model was used to guide the

qualitative data analysis and some of the themes were taken from the model

and some were generated from the research findings It must be noted that

any findings uncovered from this study cannot be generalized to the broad

public domain regarding SMEs

Section A of the questionnaire and the interview guide included questions that

collected background information on the SME managers and the responding

firms These data constitute the substantive material for analysis in the

ensuing sections The tables below depict the socio demographic

characteristics of the survey participants age group gender educational level

and experience as ownermanager In the following sections there aspects

are discussed

51

41 RESPONDENTS RATE ACCORDING TO SECTORS

TABLE 2

SECTOR SEHDAS SURVEY SENT

SURVEY RECEIVED

RESPONSE RATE

Leather and Garments

1678 20 12 60

Wood and Furniture

2196 20 11 55

Paper Products and Printing

1541 20 9 45

Chemical Rubber and Plastic

1376 20 11 55

Pottery and Ceramic

793 20

17 85

Jewellery and Related Items

1674 20 13 65

Fabricated Metal Products

1267 20 14 70

TOTAL 7 140 101 72

Table 2 shows the response rates from various sectors of SME in Mauritius

which were targeted by the online survey As the table indicates pottery and

ceramic sub sector had the highest response rate (85) with paper products

sector giving the least response rate (45) Overall 72 response rate from

all the targeted sectors was satisfactory It is worth mentioning that the total

number of participants adds to 140 since this question was only directed to

sectors not to other stakeholder in the research sample

52

42 DEMOGRAPHIC PROFILE PARTICIPANTS

TABLE 3 AGE GROUP AS PER PARTICPANT

AGE GROUP FREQUENCY PERCENTAGE

-25 7 43

26-35 34 211

36-45 53 329

46-55 35 217

56-65 22 137

gt 65 11 63

TOTAL 161 100

Evidence from most of entrepreneurial literature suggests that self-

employment becomes an increasingly attractive option as one nears middle

ages As can be seen in table 3 respondent‟s ages ranged from 25 to 65 and

the largest proportion (329) of the participants was in the age range of 36ndash

45 Additionally participants were biased towards the age ranges of between

36 and 65 and away from the under 25 and over 65

TABLE 4 GENDER PROFILE AS PER PARTICIPANT

GENDER

Male 116 720

Female 45 280

TOTAL 161 100

53

In relation to gender the research sample was predominantly male (72) a

striking although unsurprising demographic characteristic that reflects the

composition of the larger business sector in the country as a whole

Consequently only (28) were females This is clearly illustrated in table 4

above

TABLE 5 EDUCATION PROFILE AS PER PARTICIPANT

EDUCATIONAL LEVEL

Primary 8 50

Junior-level 29 180

O-level 78 484

Diploma 34 211

Higher Degrees 12 75

TOTAL 161 100

As evident from table 5 the educational levels attained by respondents varied

considerably as follows Primary School Certificate (8 or 5) Junior

Certificate (29 or 180) Ordinary Level (78 or 484) Diploma (34 or

211) and higher Degrees (12 or 75 ) On the whole though the data

suggest that the educational levels of our respondents are low the largest

proportion (398) possessing an Ordinary Level certificate

54

TABLE 6 YEARS EMPLOYED AS CEO AS PER PARTICIPANT

Years Of Employed as CEO

0-3 44 273

4-7 88 546

8-14 15 94

15-19 11 68

Over 20years 3 19

TOTAL 161 100

Not surprisingly table 6 shows that most of the responding executives did not

have education that emphasized a business curriculum This can be

understood with respect to the Mauritian educational curriculum which largely

overlooked business subjects until very recently

The research sample participants had been employed at their current firms on

average 1467 years and had an average of 12 years experience in the

manufacturing industry Four predominant job titles used by the senior

executives emerged from the questionnaireinterview responses Managing

Director (38) Director (26) Manager (20) and Chief Executive Officer

(16)

55

43 CHARACTERISTICS OF RESPONDING FIRMS

This section presents the descriptive statistics of the responding firms The

description focuses on age of the firm employment size firm revenues and

firm ownership

TABLE 7 COMPANY AGE PROFILE

Age of Company Frequency Percentage

1- 3 years 44 314

4- 6 years 68 486

7-10 years 19 136

11-15 years 7 50

Above 15 years 2 14

TOTAL 140 100

Table 7 displays the statistical data Of the firms responding the largest

proportion (486) was 4 to 6 years old Overall the sample reveals a skewed

distribution towards the ranges between 4 and 15 Also it is interesting to note

that 915 of the responding firms are mature that is beyond the start-up

phase

TABLE 8 EMPLOYEE PROFILE AS PER PARTICIPANT

Number of Employees

50-99 101 721

100-200 39 279

TOTAL 140 100

56

Unsurprisingly the vast majority of the responding businesses had fewer than

100 employees as depicted n table 8 with the largest proportion (701) in

the 50ndash99 employee categories The study found out that most small

companies would opt to have family and relatives as employees to minimise

costs Only 32 average of the firms were medium-size The preponderance

of small firms in the sample mirrors a more general pattern of firm distribution

in the country where medium and large firms are a conspicuous small

minority

TABLE 9 ANNUAL SALES AS PER COMPANY

Annual Sales

Less than R100 000 88 629

R101 000- R250 000 36 257

R251 000- R15 million 11 79

Above 15 million 5 35

Total 140 1000

As shown in table 9 the largest proportion of responding firms 88or 629

achieved a turnover below R10000000Only scant 11 or 79 posted annual

revenue in excess of R15 million

57

TABLE 10 OWNERSHIP AS PER PARTICIPANT

Ownership

Wholly Citizen 76 550

Joint Venture 42 293

Foreign Owned 22 157

TOTAL 140 100

Regarding ownership table 10 shows that an overwhelming majority or 550

of firms were wholly citizen-owned while the remaining 293and 157

were joint venture with citizen stake and foreign-owned respectively

44 Language

From most of the participants investors do not have to learn Local Mauritius

language since English and French are the official languages in the country

Since most of the investors to Mauritius are either English or French speaking

language as such is not a barrier to business practices and success for

prospective investors

ldquohellipwell it is not very important for foreign investors to learn languages

spoken in Mauritius because we can speak both English and Frenchrdquo

[Participant A5]

ldquohellipactually language is not barrier to English or French speaking investorsrdquo

[Participant A21]

58

Language is perhaps the most complex and perplexing aspect of the

Mauritian social mosaic (Rassool 1996) Contrary to the results that show that

language is not a problem for investors since most of the investors who come

to Mauritius are English or French speakers who normally fits well in the

society since these are the two official languages

This intricacy derives from the number of languages spoken combined with

the uses to which they are put and the socio-political connotations they bear

Baker and Stein (1977) scholars studying language use in Mauritius have

found that English is associated with knowledge French with culture

Creole with egalitarianism and other languages ancestral heritage

Consequently although Creole is the most widely spoken language in the

country French predominates in the media and English is the official

language of government and school instruction (Stein and Baker 1977)

According to the 1983 census the top five languages were Creole 541

Bhojpuri 204 Hindi 115 percen French 37 and Tamil 37 These

figures indicate the principal language used in the home Most Mauritians

however speak several languages

Literature suggests that global organizational structures need to adopt

common rules and procedures in order to have a common bdquolanguage‟ for

communicating across cultural borders (Kostova 1999 Kostova and Roth

2003 Gupta and Govindarajan 2000) This is directly reflected by the results

above that foreign investors need not to learn the local language of locals but

its important to create a common language within the organisation that is

59

understood by all stakeholders in the organisation for effective and efficient

communication

45 Religion

The study found that main religions in Mauritius are Hindu Muslim and

Christianity to a lesser extent Hindus make up approximately half of

religiously affiliated Mauritians Of the remaining Mauritians approximately a

third are Christians and about 15 Muslim followed by small Buddhist and

Sikh communities It is therefore imperative that a foreign investor considers

religion of the people of Mauritius before setting up a business Religion

The study also found out that various religions found on Mauritius tend to play

a major part in the islands cultural events and churches temples and

mosques are to be found everywhere Hindu and Tamil celebrations are part

of Mauritian cultural life

ldquohellipFestivals such as Divali (the festival of lights) Holi (in which participants

are covered in colourful powders) and Thai Poosam in which Tamil devotees

pierce their bodies with masses of needles as an act of penance are

popularly attended by Mauritianshelliprdquo [Participant A60]

ldquohelliphellipthere are also a number of diverse practices and superstitions

originating in beliefs brought from Africa and Asia Local sorcerers known as

longanistes or traiteurs are sometimes called in to settle arguments exact

revenge or administer love potionshelliphelliprdquo [Participant B41]

60

However all communities live together in harmony with each other regardless

of religion the study learnt

hellipHarmonious separatism is how we characterise our communal relations

in Mauritiushellip [Participant A13]

Since all citizens are ldquodescendants of slavery there are no tribes unlike

other African countries This has made integration and assimilation easier and

it makes it very easy for any SME to adapt to the local conditions due to pre

existing harmonyrdquohellip [Participant A13]

It is worth noting that businesses remain closed in public religious days but

the purchasing power remains the same regardless of whether it‟s a public

holiday or not

ldquohellipthe demand is not dependent on whether itrsquos a holiday or nothelliprdquo

[Participant A11]

ldquohellipit doesnrsquot matter really whether its holiday or religious holidayhelliprdquo

[Participant A21]

According to Stein and Baker (1977) the Mauritian society is noteworthy for

its high degree of religious tolerance Mauritians often share in the

observances of religious groups other than their own In part as a result of the

multiplicity of religions Mauritius has more than twenty national holidays In

addition the government grants subsidies to all major religious groups

61

according to their membership (Stein and Baker 1977)This is also evident

from the results of the research

Ethnicity religion and language have been important factors in shaping the

way Mauritians relate to each other in the political and social spheres Despite

the fact that sectarian factors are less of a determining factor in peoples

social and political behaviour they remain an important clue to the peoples

past and self-identity (Rassool 2001) As a foreign investor understanding

the religious belies of a society and taking all the necessary details in to

consideration play a major role in an international business environment

setting (Hosftede 1980) For example observing religious holiday and making

sure employees get days off and annual leaves on such important days

having prayer rooms for those willing to pray at work and creating a non-

discriminatory environment for all employees

It is worth mentioning that while religion does not have a direct impact on

Mauritius investment since it an international business hub However it is

important for investors to take note of all the aspects of religion since it plays a

very important role in lives of the Mauritians For example there are religious

holidays as an employer it is important to follow the religious holiday calendar

and give annual leaves to employees on such important days

46 Social Life

For the interest of prospective investors the study found that the social life in

Mauritius is very much close to families and friends People all meet at open

markets for normal shopping and socialise over weekends ldquoeven ministers

62

managing directors of big companies go to open marketsrdquo [Participant

A12]

There is no busy night life in the country as well as cinema and theatres

because most people prefer home video entertainment ldquoMost people found at

social places like cinemas pubs clubs etc are employees and not

employersrdquohelliphellip [Participant A12] Prospective investors should therefore

know that they are likely to meet business associates at board rooms or at

their offices rather than at social centres

In a society where tolerance is a national virtue and ethnic conflicts are

invisible to the casual visitor it takes time to learn the dos and donts of

socialising ldquohelliphere in Mauritius you must realize that we walk on eggs

continuouslyhelliprdquo [Participant B36] For a peaceful and tolerant as Mauritius

undoubtedly is the diverse groups populating the island do not collectively

make up a nation Mauritius like any other island is a nation of nations and

compromise is the order of the day be it in politics in the economy in the

media or at a dinner party the study found

The study found out that unlike other African societies Mauritius people would

prefer to stay at home and watch movies play video games with kids or visit

friends and relatives to socialise or for a night out There are not many social

night clubs in Mauritius as compared to the United Kingdom ldquohellipmany homes

today have a Digital Video Decoders (DVD) sets and donrsquot see the importance

of going out to cinemas and would helliphelliphelliprdquo [Participant A12]

63

This does not come as a surprise since literature suggests that Mauritius

though it is multicultural society and an international hub for business there

are a quiet peaceful and tolerant nation and would prefer to keep their space

(Stein and Baker 1977)

47 Market Accessibility

The study found that as first foreign investor Mauritius government has open

market programme When the free operational zone initiative began investors

imported raw materials imported duty free and foreign companies had to

show transformation of raw materials into fished exports since the

government‟s aim was to increase exports thus improve balance of trade

However in the early stages the initiative did not work as expected because

of certain barriers

Lack of adequate government incentives to lure more investors

Too much repetition meaning most of the companies where doing the

same thing

Lack of skilled human resources

The scenario is summarised by participant B3 in the following

statementldquohelliphellipour people did not have culture of businessrdquo

For more access to the markets further initiatives were put into place The

government assured investors of freedom of capital movement that is the

investors were guaranteed that they would bring their money into and out of

the country whenever they felt like doing so In addition the government

64

embarked on providing more facilities (industrial buildings) and infrastructures

all over the country opening up rural areas because towns already had

infrastructures Lastly first time investors were provided with free access to

customs thus maintaining the earlier option of tax free imports

While Mauritius was doing all these events elsewhere in the world played to

their favour European Union and USA were imposing import quotas on

Chinese and Indian imports to prevent damping So these investors had to

look for alternative markets and Mauritius turned out to be one of such

markets But the government had to act quickly to avoid bdquotransit investors‟

ldquohellipthey are investors who want to do business when it favours them but when

they begin to loose certain privileges or profits get diminished then they take

offrdquohelliphellip [Participant B3]

To avoid this foreign investors were made to transfer skills and knowledge to

local community which led to emergence of Mauritius community of

manufacturing

ldquowho started from easy stitching like socks pyjamas bras etc and later

upgraded to big Mauritius labelshelliprdquo [Participant B3]

The study further found that the initiative did not stop there The government

further established Mauritius Enterprise Development Investment Authority

(MEDIA) in 1985 which took lead in looking for prospective investors from

65

Europe USA Hong Kong and India among others Any willing investor was

transported to Mauritius and accommodated freely on government accounts to

tour the country and carry out investment feasibility studies This helped to

popularise the investment opportunities in Mauritius and attracted many more

investors Currently MEDIA has been transformed into Mauritius Board of

Investment which is no longer in charge of managing industries but

ldquopromotes Mauritius businesses abroad and participates in trade fairs to

further open uprdquo [participant B3]

The study also found out that there are specific niche markets for foreign

investment in Mauritius namely the Offshore Industry the Financial Industry

the Construction and Tourism especially in the area of high class luxury

property market in form of villas hotels and apartments and of recent the

Information Technology (IT) industry These industries cover a large spectrum

including SMEs

ldquohellipone of these sectors makes a very good investment for any investor

especially the construction industryhelliprdquo [Participant A89]

The results agree with Putz (2000) which notes that niche markets make

establishing a business by immigrants easier because the immigrants needs

for consumer goods create a specific demand This is evidence by all the

incentive the Mauritian government have put in order to attract foreign

investors in to country for the benefit of the Mauritian population Furthermore

Putz (2000) emphasise the opportunities offered by the host country including

66

access to the market and job market conditions as important factors for

international business

48 The role of ICT to SME business in Mauritius

The study found that Mauritius has a very well established ICT sector It has

formed the backbone of SME success in Mauritius As early as 1990 the

country provided hellip ldquothe fastest broadband in the world to help SME business

investors who were each allocated free 2MB internet accessrdquohellip[Participant

A 23] Recently the government has in turn invested a lot of money in

developing a cyber city a few kilometres away from the capital Port Louis

which will form the hub for future investments

This high level of ICT development in the country has created SME in areas

such as offshore financial services calls centres and enhanced tourism

industry growth Any prospective investors are guaranteed of highly

developed ICT backed up by highly qualified local human resources The

offshore investment sector has even been further boosted byhellipldquobilateral

agreements with India allowing companies registered in Mauritius to transfer

funds to India tax freerdquohellip[participant B13]

It is hoped that in helliprdquo5 years time the whole island will have free wifi

connectivityrdquo participant B33 The country not only makes use of its advanced

ICT sector but has become a big player in the region as well For example

Mauritius state informatics computerised South African government in 1996 It

has also won other computerisation contracts in Zambia Zimbabwe Namibia

Kenya and Ghana To sustain such success ldquopartnerships have been formed

67

with global players such as Microsoft to provide training not just to Mauritius

nationals but other scholars from the South Eastern Africa region as

wellrdquohellip[participant B13]As matter of fact the government of Mauritius has

invested billions in building s cyber-city a few miles aware from the capital

Port Louis

ldquoits opening in July this year and it is expected to be the centre of attraction

for investorsrdquo [Participant B13]

ldquoactually the government invested in this cyber-city with the intention to

attract European and American investorsrdquo [Participant A6]

From these results there is evidence that technology plays a major role in

SME development Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

68

48 Governance and the role of women in SME sector

in Mauritius

Mauritius is a multicultural country with ldquo70 of the population of Chinese

Indian ancestry 2 white French origin and the remaining mixed race ndash

creolesrdquo [participant A17] Europe has not have a lot if cultural influence on the

country and predominant cultures are Asian African cultures Study found

that common folklore popular songs in Mauritius would also be ordinary

found on other African countries such as Senegal Mozambique Cameroon

and Sierra Leone among others signifying deep rooted African traditions

The government maintains ndash discrimination laws for either gender In the early

stages of SME development women provided the bulk of the labour in the

rural areas as industries moved away from cities into the rural areas There

are concerted efforts to get women into jobs especially leadership roles

ldquowomen themselves are too slow to act and take advantage of the

government incentivesrdquo

The study found out that woman in Mauritius do not occupy positions of

strategic power decision making This is not a surprise because it is the same

with most Southern African countries The government of Mauritius has put a

lot of structures to support women in business but women are taking it slow to

utilize these structures

69

There are many government agencies and organizations headed by women

and even cabinet posts but most women would rather stay out of politics

becausehelliphellipldquopolitics can get very dirty involving personal lives of politicians

which men donrsquot mind but women do mind a lot aboutrdquohellip[participant A 17)

However in other sectors like education and healthcare there are many

women represented in the labour force

The study also found out that just like any other society one can not ldquohellipstop

some kind of abuse for both males and females There are cases of both

female and male harassment but the law comes in to protect such victims

There are also cases of petty crime and rape involving women either as

perpetrators or victimsrdquohellip [Participant A13]

According to AllAfrica Global Media (2008) the winds of change are blowing

across the island of Mauritius and many men in this traditionally conservative

nation are working hand in hand with women to see that the common sense of

gender equality prevails The absence of women at the decision-making table

usually means the absence of their priorities and needs Irrespective of the

Southern African Develoment Community (SADC) Declaration there are so

few women in politics This is evident from the results of the study which found

that women will rather do health jobs and education than to play the dirty

tricks of politics

Women councillors make up a mere 37 in the Moka-Flacq District Council

This is the lowest figure not only in Mauritius but also in the SADC region

70

This is far from the 2005 30 target not to mention the 50 goal now being

set for the region and included the draft Protocol on Gender and Development

up for review at the August SADC Heads of State Summit ( AllAfrica Global

Media 2008)The results found out that there is also a few representations of

women in business Women do mostly the dirty jobs of caring for children and

their families and do not have the courage to enter the business sector This is

not surprising especially in the SADC region women play the minority role

and are rarely represented at the strategic decision making level hence their

needs are always neglected resulting in women poverty

49 Challenges faced by the country and hence SME investors

Stiff competition from other countries such ashelliphellipldquoBotswana Vietnam and

South East Asia in the textile industry due to cheap labour Maldives and the

Caribbean Islands for tourism difficult in Training enough qualified personnel

in ICT to cope with demand International competition and access to fundsrdquo

hellip[participant B13]

To face these challenges the study found that the country has expanded

tertiary education and formed partnerships with foreign universities such as

ldquoFrench Scientific University which has been running Medical school in

Mauritius for 10 years By the time of this study an agreement had been

reached by Thames valley university (UK) to open up campus in

Mauritiusrdquohellip[participant B15] The aim of the government is to offer high

quality education to students from the region as well as far away like China at

affordable cost and to compete with European universities Further to

71

educational development the study also found out that the country is striving

to create partnerships with ldquoresearch organisations and to create high quality

healthcare so as to benefit from health tourism where would just travel to the

country to get affordable high quality specialised health carerdquohelliphellip [Participant

A3]

Finally results show that there is stiff competition from different sectors of

business and other force which needs to be taken into consideration when

doing business internationally Globalization tends to redistribute economic

rewards in a non-uniform manner a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) It essential to know all

the factors surrounding the business sector and understanding all the

business practices before investing to avoid any loss

72

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

Research on culture and IB is definitely a bdquogrowth‟ area because the business

world is in many ways becoming one The researcher concluded the following

based on study findings

Firstly the cultural diversity and harmony of the island make Mauritius a

unique place in the world It is also known for its social peace political stability

and racial harmony Its steady economic growth over the years coupled with

its nation‟s social cohesion and prosperity ensure continuing development

Secondly Mauritius enjoys a literacy rate over 80 percent Skilled labour

graduates and qualified professional including lawyers engineers IT

programmers consultants accountants and chartered secretaries are

available to suit virtually all business needs in two international languages

English and French Language is therefore not a barrier to foreign investment

In addition academic training at the University of Mauritius and the newly

established University of Technology a comprehensive system of vocational

training through the Industrial and Vocational Training Board (IVTB) ensures a

ready supply of skills in a number of fields such as tourism engineering

electronics jewellery ICT printing and textiles

Thirdly In view of the importance of foreign investment as a source of

sustenance to economic growth the government of Mauritius has taken a

series of policy measures to encourage its flows into manufacturing offshore

73

banking and financial services information technology communication and

tourism As far as foreign investors are concerned Mauritius offers itself as an

attractive destination because several positive features such as political

stability availability of skilled labour and investment-friendly rules and

institutions

Fourthly after a sustained growth path over the last three decades based on

sugar textiles and tourism Mauritius is now shifting gears to move towards a

higher stage of economic development so as to consolidate its position as a

premier international hub Foreign Direct Investment (FDI) has played an

important role in the development of Mauritius and will again be decisive when

the country embarks on high value-added capital intensive and knowledge-

based activities

Fifthly the government plays the role of a facilitator and has endeavoured at

all times to create the most conducive investment environment by enacting

appropriate legislations building state-of-the-art infrastructure investing in

human capital and introducing packages of investment incentives for the

manufacturing financial services and ICT sectors so as to enhance the image

of Mauritius

In this respect the Board of Investment (BOI) is the first contact point for

anyone investing in Mauritius Operating under the aegis of the Ministry of

Finance the BOI was established in March 2001 under the Investment

74

Promotion Act to give a new impetus to foreign direct investment The BOI is

the apex organization for the promotion and facilitation of investment in

Mauritius The primary role of BOI is to stimulate the development expansion

and growth of the economy by promoting Mauritius as a competing business

and service centre It aims at streamlining the legal framework and to make

better provision for the promotion and facilitation of investments in Mauritius It

acts as a facilitator and provides a one-stop shop service to both local and

foreign investors ensuring reliable and speedy processing of applications The

BOI receives processes and approves all applications for investing in

Mauritius It also assists investors in obtaining the necessary secondary

permits and clearances from relevant authorities thus ensuring a speedy

implementation project

Six Mauritius pursues a liberal investment policy and actively encourages

foreign direct investment in all sectors of the economy Attractive packages of

both fiscal and non-fiscal incentives tailor-made to the needs of each priority

area of development are offered to investors Excellent opportunities for

investment in Mauritius exist in various sectors of the economy including

manufacturing information technology knowledge industry regional

headquarters tourism and leisure financial services Freeport activities

amongst other sectors Some of the priority areas are in Information and

Communication Technology which is set to a play a lead role in the economic

development of the country in the medium and long terms The availability of

high bandwidth connectivity (with SAFE Project and international Gateways)

at near global parity in quality and tariff on the one hand and the setting up of

75

dedicated IT habitats including the Cyber city at Ebeacutene on the other hand

plus total Government support to this industry are testimony of the importance

of this industry to Mauritius Others include the manufacturing sector textiles

and apparel the spinning sector electronics and light engineering medicals

and pharmaceuticals agro-business leather products and jewellery and

watches

The export-oriented manufacturing sector has been the backbone of the

Mauritian economy for the past three decades This sector remains a major

constituent of the Mauritian economy in terms of foreign exchange earnings

employment and contribution to GDP and is called upon to continue to play

an important role in the consolidation and diversification of the industrial base

of the country certain

Lastly some incentives provided by government to foreign investors In the

manufacturing sector these include among others

No customs or duty or sales tax on raw materials and equipment

No tax on dividends

No capital gains tax

Free repatriation of profits dividends and capital

50 relief on personal income tax for expatriate staff

New incentives for the ICT Sector consist inter alia of

the availability of tax holiday up to year 2008 for specified

pioneering high-skills ICT operators typically geared towards the

export market such as software development multi-media and to

high-level ICT training institutions

76

customs duty-free import of ICT and similar equipment

50 relief of personal income tax for a specified number of foreign IT

staff

duty-free import of personal belongings of foreign IT staff

effective fast track procedure for procession of visa and work

permits for foreign staff including spouses

From the above the research concludes that Mauritius being a multicultural

society as it is the culture they share does not have a direct impact on

investment in Mauritius because of it is an international hub for business It is

also expected that from the results the situation is not going to change after

time but will keep in this shape for a long since it is the government incentive

to attract more investors into the country However there are certain aspect of

culture eg believes that foreign investors need to understand and take into

consideration This study recommends any prospective investor to make good

investment in to Mauritius without fear

77

CHAPTER SIX

REFLECTIONS FROM THE STUDY

The views derived from this study might not be directly applicable to the whole

region because of variations in socioeconomic settings in various parts of the

Mauritius Also views expressed in this study were obtained mainly from

urban based managers and respondents and might not be similar to rural

based SMEs from the same community or area

Some scholars might not support the sampling techniques used but they

were the most practicable given the circumstances

Legal practitioners in Mauritius were supposed to be part of the sample but

they were hard to reach with some declining to participate

Demographically and geographically the sites were larger than anticipated

given the time and resources available for the study

Lastly the study was limited to the previous 20 years which might have

yielded same generational trend missing the opportunity to get data across

various generations within the sites

78

CHAPTER SEVEN

FUTURE RESEARCH

With more funding and resources a similar study could be conducted

throughout a wider geographic region and encompassing all categories of

SMEs micro small and medium Furthermore with more time a greater

number of interviews could be conducted which would provide richer data that

would be more in depth for conclusive analyses to be made Additionally

participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

79

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

WORD COUNT 16 969

80

APPENDICES APPENDIX 1 MauritiusData Profile

2000 2005 2006

World view

Population total (millions) 119 124 125

Population growth (annual ) 10 08 08

Surface area (sq km) (thousands) 20 20 20

Poverty headcount ratio at national poverty line ( of population)

GNI Atlas method (current US$) (billions) 444 653 681

GNI per capita Atlas method (current US$) 3740 5250 5430

GNI PPP (current international $) (billions) 891 1239 1334

GNI per capita PPP (current international $) 7510 9970 10640

People

Income share held by lowest 20

Life expectancy at birth total (years) 72 73 73

Fertility rate total (births per woman) 20 20 20

Adolescent fertility rate (births per 1000 women ages 15-19) 39 40 41

Contraceptive prevalence ( of women ages 15-49)

Births attended by skilled health staff ( of total) 100 99

Mortality rate under-5 (per 1000) 18 15 14

Malnutrition prevalence weight for age ( of children under 5)

Immunization measles ( of children ages 12-23 months) 84 98 99

Primary completion rate total ( of relevant age group) 105 97 92

Ratio of girls to boys in primary and secondary education () 98 100 103

Prevalence of HIV total ( of population ages 15-49) 06

Environment

Forest area (sq km) (thousands) 04 04

Agricultural land ( of land area) 557 557

Annual freshwater withdrawals total ( of internal resources)

Improved water source ( of population with access) 100

Improved sanitation facilities urban ( of urban population with access) 95

Energy use (kg of oil equivalent per capita)

CO2 emissions (metric tons per capita) 23

Electric power consumption (kWh per capita)

Economy

GDP (current US$) (billions) 447 629 635

GDP growth (annual ) 40 46 35

Inflation GDP deflator (annual ) 37 48 41

Agriculture value added ( of GDP) 6 6 6

Industry value added ( of GDP) 31 28 27

Services etc value added ( of GDP) 63 66 68

Exports of goods and services ( of GDP) 63 57 60

Imports of goods and services ( of GDP) 65 61 67

Gross capital formation ( of GDP) 26 23 25

Revenue excluding grants ( of GDP) 220 214 215

Cash surplusdeficit ( of GDP) -11 -21 -30

States and markets

Time required to start a business (days) 46 46

Market capitalization of listed companies ( of GDP) 298 416 567

Military expenditure ( of GDP) 02 02

Fixed line and mobile phone subscribers (per 100 people) 39 82 90

Internet users (per 100 people) 73 241 145

Roads paved ( of total roads) 97

High-technology exports ( of manufactured exports) 1 2 24

Global links

Merchandise trade ( of GDP) 82 84 91

Net barter terms of trade (2000 = 100) 100 109 115

External debt total (DOD current US$) (millions) 1713 2153 1997

Short-term debt outstanding (DOD current US$) (millions) 767 1363 1363

Total debt service ( of exports of goods services and income) 181 72 71

Foreign direct investment net inflows (BoP current US$) (millions) 266 39 107

Workers remittances and compensation of employees received (US$) (millions)

177 215 215

Official development assistance and official aid (current US$) (millions) 20 34 19

Source World Development Indicators database April 2008

81

APPENDIX 2

SUMMARY GENDER PROFILE (Mauritius)

Mauritius

Sub-Saharan Africa

Upper middle income

1980 1990 2000 2004 1980 2004 1980 2004

GNP per capita (US$) 1210 2300 3690 4640 652 601 2391 4769

Population

Total (millions) 10 11 12 12 3850 7258 4394 5762

Female ( of total) 507 501 502 503 503 501 515 514

Life expectancy at birth (years)

Male 63 66 68 69 47 46 63 66

Female 69 73 75 76 50 47 71 73

Adult literacy rate ( of people aged 15+)

Male 848 884 954

Female 750 805 942

LABOR FORCE PARTICIPATION

Total labor force (millions) 0 0 1 1 157 299 193 256

Labor force female ( of total labor force)

37 34 34 35 43 42 42 41

Unemployment

Total ( of total labor force)

33 88 102 12

Female ( of female labor force)

36 96 126 134

EDUCATION ACCESS AND ATTAINMENT

Net primary school enrollment rate

Male 91 96 94 68

Female 92 97 96 60

Progression to grade 5 ( of cohort)

Male 97 99

Female 98 99

Primary completion rates ( of relevant age group)

Male 61 105 98 66 95

Female 63 104 102 56 96

Youth literacy Rate ( of people aged 15-24)

Male 912 937 978

Female 911 954 974

HEALTH

Total fertility rate (births per woman)

27 23 20 20 67 53 31 20

Contraceptive prevalence ( of women aged 15-49)

75 26 76 22 69

95

82

APPENDIX 3

DATA COLLECTION FORM FOR THE SURVEY Sitehelliphelliphelliphelliphellip Participant numberhelliphelliphelliphellip MANAGING DIRECTOR CEO MANAGER

Age group -25 26 ndash 35 36 - 45 46-55 56-64 65+

Education Nursery ndash Standard 4

Std 5 ndash 7 (8) Form 1 ndash 2

Form 3 ndash 4 or A level

College University

Employment Yes No Business (what type)

Partnership Whole Citizen

Joint Venture

Age of Company

1-3 years 4-6 years 7-10 years

11-15 Above 15yrs

Number of Employees

10-25 50-99 100-149 150-200

Place of birth

In the constituency

Outside the constituency

Where

Residence Rural Urban Where

Before starting business

After business

Children

Boys Number

Girls Number

Any born a Yes None

Are they in school

Yes No Some

Working Yes No Some

Annual Sales

Balance Sheet

Less than R1000000

R101 000- 250 000

R251 000- 15 million

R 15 million +

Years Employed as CEO

0-3 4-7 8-14 15-19 Over 20 years

83

APPENDIX 4 Qualitative data questionnaire The following questions were used as a guide during the focus group discussions However they were not followed in the strict order or wording as they appear here

SOCIAL INCLUSION EXCLUSION

I am going to ask you questions regarding support you think the society could give foreign investors There is no right or wrong answers it is just about your opinion

a) How do you feel about foreign investors coming to Mauritius

b) How has your friendship with foreign business before and after they arrive in Mauritius

c) Do you keep in touch with foreign businesses around you and prospective investors

d) In your opinion how does foreign business feel about Mauritius

e) Are foreign businesses doing well or badly

f) What support structures or government incentives are there for foreign investors

g) What kind of support would you like to receive from the government

BUSINESS ATTITUDE AND BELIEFS

I am now going to ask you some general questions about business and your opinions about it

a) How would you describe the general business environment

b) Do you find it difficult to do business with people from different countries of the world Why

c) What do you believe the first thing to do on the morning before opening

your business (Local people) Why

d) How best can the Mauritius people be motivated into business How do you get over them

84

e) What areas do local people consider as niche areas for foreign

business

f) How do local people organize their business Why

g) As a local business person what would you consider as abomination of business in Mauritius Why

h) What is the role of women in the business sector

CULTURE

I am now going to ask you questions about the your culture

a) What are your views about business culture in Port Louis

b) What are the challenges of national culture on business practices in your opinion

c) What are the benefits of culture on business practice

d) Do you think foreign investors need to know the local language when investing in Mauritius

e) If you were to advice a foreign investor what would you want them to know about Mauritius

f) How do you think the family daily practice influences business in

Mauritius

g) What business actions of behaviors are sensitive to the local people

h) How best can foreign investors assimilate with the local business people

i) What do local people like to buy on weekends week days public religious holidays

j) What marketing strategies violet the culture of Mauritius ndashwomen naked Eating behavior Etc

85

APPENDIX 5

Introductory letter consent form

TITLE CULTURE AND INTERNATIONAL BUSINESS

ENTREPRENUERSHIP A CASE STUDY OF MAURITIUS

INTRODUCTION

I am Angelinah Boniface a student pursuing Masters of Science in

Information Systems the University of Sheffield United Kingdom I am

conducting a study on the Impact of culture on small and medium

enterprises for my dissertation The study is expected to last 3 months and a

report of the findings will be availed to all interested stakeholders including the

university as part of course requirements

PURPOSE OF THE STUDY

This study is intended to gain insight into views and opinions about

widowhood and inheritance in relation to health and well being of participants

and the community at large Evidence from this study may be useful in future

government and development agencies‟ planning and provision of relevant

interventions for the benefit of the whole community

VOLUNTARINESS AND CONFIDENTIALITY

Your participation in this study is purely voluntary and you can withdraw

at any time should you feel uncomfortable to proceed Information obtained

from this study will be used for no any other purpose other than the

dissertation It will be kept confidential only accessible to the researcher and

pseudonyms will be used to ensure anonymity and confidentiality of

participants and location The researcher will strive to treat all participants

with dignity respect equality and minimise possible harm that might arise

from the study

Agreeing to take part in this study will be treated as your consent to be

involved in this research BUT YOU HAVE THE RIGHT TO WITHDRAW

THE CONSENT

86

RISKS AND BENEFITS

There are no risks to the questions that will be asked If at any point you feel

uncomfortable to answer any question please feel free to ignore such to avoid

any harm

There is likely to be no immediate benefits to you as a participant However

the information obtained in this study will go a long way in informing the

younger generation and wider audience about the culture It might also be

used by the government and other development agencies to plan for

interventions relevant to the needs of widows in your community in the future

based on the evidence you have provided in this study

CONTACTS

The researcher can be contacted at +44 0791263163 lip07acbshefacuk

or linabonyahoocom in case of any questions issues

In case of any problems that need university attention my supervisor can be

contacted at kalbrightshefacuk

PLEASE DONrsquoT TAKE PART IN THIS STUDY IF YOU ARE BELOW 18

YEARS OF AGE

Thank you very much for your anticipated cooperation

Researcher‟s signature Participant‟s signature

helliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

87

REFERENCES

Bhagat RSet al (2002) Cultural variations in the cross-border transfer of

organizational knowledge an integrative framework Academy of

Management Review 27(2) 204ndash221

Boyacigiller NA amp Adler NJ (1991) ldquoThe parochial dinosaur organizational

science in a global contextrdquo Academy of Management Review 16(2) 262ndash

290

Bowling A (ed) (2002) Research methods in health Investigating health and

health services Buckingham Open University press

Dabee R and Greenway D (2001)The Mauritian Economy A Reader

PalgraveNew York

Dawson C D (2002) Practical research methods A user friendly guide to

mastering research techniques and projects Oxford How to Books Ltd

Denscombe M (ed) (2007) The good research guide for small scale social

research projects Berkshire Open University Press

Denscombe M(ed) (2003) The good research guide For small scale social

research projects Maidenhead Open University Press

Economic And Social Research Council (2005) ESRC research ethics

framework [online]

httpwwwesrcsocietytodayacukESRCInfoCentreopportunitiesresearch5

Fethics5Fframework [ Accessed May 05 2008]

88

Gilbert N (ed) (2001) Researching social life London Sage Publishers

Grbich C (1999) Qualitative research in health An introduction London

Sage publications

Hunter D amp Lang T (1993) The Leeds declaration Leeds Nuffield Institute

for Health

Neuman L W(ed) (2000) Social research methods qualitative and

quantitative approaches Needham Heights MA Allyn amp Bacon

Maynard M amp Purvis J (1994) Researching womens lives from a feminist

perspective London Taylor and Francis group

Muuka GN (2002) Africas informal sector matters a challenge to scholars

to close the knowledge gap Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

Business and Development International Conference Port Elizabeth April 3-

6 pp1-6

Southwood R (2004)The impact of ICT on SMEs ndash a motor for future

economic growth in hard-pressed times [Online] Balancing Act news update

wwwbalancingact-africacomnewscurrent1html [Accessed 26 January

2008]

Machacha L (2002) Impact of information technology on small and medium

enterprises (SMEs) in Botswana Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

89

Business and Development International Conference Port Elizabeth April 3-

6 pp277-82

Organisation for Economic Co-operation and Development (OECD)

(2000)OECD study highlights role of small and medium enterprises in job

creation Organisation for Economic Co-operation and Development

[Online]wwwoecdorgmediapublishpb00-11ahtm [Accessed 8 July 2008]

Commonwealth Secretariat UK (2006) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius London Commonwealth

Secretariat

Reed DM (1998) Using the Business Excellence Model in Small Service

Business British Quality Foundation

Taylor AW amp Adair RG (1994) ldquoEvolution of Quality awards and self

assessment practices in Europe a case for considering organisation sizerdquo

Total quality Management 5 (4) 227-237

United Nations (1993) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

Johanson J amp Wiedersheim-Paul F (1995) The Internationalization of the

Firm - Four Swedish Cases Journal of Management Studies 20 (3) 123-139

90

Chui ACW Lloyd AE and Kwok CCY (2002) The determination of

capital structure is national culture a missing piece to the puzzlerdquo Journal of

International Business Studies 33(1) 99ndash127

Earley PC amp Gibson CB (2002) Multinational Teams A New Perspective

Lawrence Earlbaum and Associates Mahwah NJ

Gibson CB (1999) ldquoDo they do what they believe they can Group-efficacy

beliefs and group performance across tasks and culturesrdquo Academy of

Management Journal 42(2) 138ndash152

Hofstede G (1980) Cultures Consequences International Differences in

Work-Related Values Sage Newbury Park CA

SMIDO (2006)A new Vision For SMEs Development Mauritius

Government Printer Port Louis

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Stone A (1997) SMEs and Technology why should we make special efforts

to help World Bank

Bhagat RS et al (2003) Knowledge in Cross-Cultural Management in Era

of Globalization Where Do we Go from Here in D Tjosvold and K Leung

91

(eds) Cross-Cultural Management Foundations and Future Ashgate Englan

155ndash176

Cairncross F (2001) The Death of Distance Harvard Business School Press

Boston MA

Commonwealth Secretariat UK (2005) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius Commonwealth Secretariat

Drucker PF (1995) Managing in a Time of Great Change Truman Talley

BooksDutton New York

Guilleacuten M (2001) ldquoIs globalization civilizing destructive or feeble A critique

of five key debates in the social science literaturerdquo Annual Review of

Sociology 27 235ndash260

Gibson CB and Cohen SG (2003) Virtual Teams that Work Creating

Conditions for Virtual Team Effectiveness Jossey-Bass San Francisco

Grazol P et al(2004) ldquoThe Effect of Culture on IT Diffusion Email and Fax in

Japan and the US Information Systems Researchrdquo Journal of International

Consumer Marketing 16 4 pp 29-64

Greider W (1997) One World Ready or Not Crown Business New York

92

Gertler MS (1997) The Invention of Regional Culture In Lee R and Willis J

eds Geographies of Economies London Arnold

Govindarajan V and Gupta AK (2001) The Quest for Global Dominance

Transforming Global Presence into Global Competitive Advantage Jossey-

Bass San Francisco

Haire M et al(1966)Managerial Thinking An International Study Wiley

New York

Heuer M et al(1999) Cultural stability or change among managers in

Indonesia Journal of International Business Studies 30(3) 599ndash610

Hofstede G (1997) Cultures and Organizations Software of the Mind New

York McGraw-Hill

Hofstede GH (2001) Cultures Consequences Comparing Values

Behaviors Institutions and Organizations Across Nations London Sage

Publications

Hoecklin L (1995)Embedded Autonomy States and Industrial

Transformation Princeton NJ Princeton University Press

93

IBP USA (2002) Mauritius Investment and Business Guide IB Tauris and Co

LTD London

Kerr C et al (1960) Industrialism and Industrial Man Harvard University

Press Cambridge MA

Kirkman BL amp Shapiro DL (2000) ldquoUnderstanding why team members

won‟t share an examination of factors related to employee receptivity to team-

based rewardsrdquo Small Group Research 31(2) 175ndash209

Lisenda L (2003) Small and medium-scale enterprises in Botswana their

characteristics sources of finance and problems BIDPA Gaborone

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Meredith GG (ed) (2004) Small Business Management in Australia

McGraw-Hill Sydney

Mistry PS (1999) ldquoCommentary Mauritius ndash quo vadisrdquo African Affairs 98

(393) 551ndash69

Mullins LJ(ed) (1999) Management and Organizational Behavior 5th ed

London Financial Times Pitman

94

Myers MDamp Tan FB (2002) ldquoBeyond Models of National Culture in

Information Systems Researchrdquo Journal of Global Information Management

10 (1) 112-134

Putz R (2000) ldquoCulture and entrepreneurship views from the middle and

lower level managersrdquo Journal of Business Ethics 22 145- 153

Scottish Economic Statistics Scottish ExecutiveONS IDBR (2005)Size

Analysis of Welsh Business SDR 692004Statistical Press Release URN

0440

Straub D et al (2002) rdquoTowards A Theory-Based Measurement of Culture

Journal of Global Information managementrdquo 10 (1)

Schaeffer RK (2003) Understanding Globalization The Social

Consequences of Political Economic and Environmental Change Rowman amp

Littlefield Lanham MD

SMIDOA new Vision For SMEs Development(May 1996)

SMME Task Force Report (1998) Small medium and micro-enterprises task

fore force report Government Printer Ministry of Commerce and Industry

Sondergaard M amp Hofstede G (1994) ldquoA study of Reviews Citations and

Replicationsrdquo Organization Studies 15 (3) 447-456

95

Schein EH (1992) Organizational Culture and Leadership Jossey-Bass

San Francisco

Stone A ( 1997) SMEs and Technology why should we make special efforts

to help (World Bank 1997)

Statistical Press Release (2005) URN 0592 Office for National Statistics

Weisinger JYamp Trauth EM (2002) ldquoSituating Culture in the Global

Information Sectorrdquo Information Technology amp People 15 (4) 306-320

United Nations (2005) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

ii

27Investing in Mauritius35 30 METHODOLOGY37 31Research Setting39 32Methods40 33Research Participants and Sampling42 34Data collection Instrumentshelliphellip43 35Ethical Considerationshelliphellip44 36Procedure45 37Data Analysis46 38 Planned Programme of Dissemination47 39Time Scale48 310 Limitations and Delimitations48 40 RESEARCH FINDINGS AND DISCUSSION50 41Respondents Rate According to Sectors51 42Demographic Profile Participants52 43Characteristics of Responding Firms55 44Language57 45Religion 59 46Social life61 47 Market Accessibility63 48The Role of ICT to SME Business in Mauritius 66 49Governance and the Role of Women in SME sector in Mauritius68 410 Challenges Faced by the Country and Hence SME investors70 50 CONCLUSION AND RECOMMENDATIONS72 60 REFLELECTIONS FROM THE STUDY77

iii

70 FURTHER RESEARCH78 80 APPENDICES80 81 Apendix 180 82 Apendix 281 83 Apendix 382 84 Apendix 483 85 Apendix 586 90 REFERENCES87

iv

DEDICATIONS

To my father Shadreck Boniface who passed on before I could give back all

the good things you did in my life you will always be remembered by me for

the gap you left in my life no one can replace may his soul rest in peace To

my mother in recognition of your worth for all the support you gave A feeling

bears on itself the scars of its birth it recollects as a subjective emotion its

struggle for existence it retains the impress of what might have been but is

not and hope if the fool would persist in his folly he would become wise To

my daughter and to all my family and friends this is for you

THE BOTSWANA FLAG

The Botswana flag was officially adopted on September 30 1966

The colours on the flag correspond to those on the national coat of arms The

blue represents water the white-black-white bands depict the racial harmony

of the people as well as the pluralist nature of the society They are inspired

by the coat of the zebra the national animal

v

This report is dedicated to all those who spend their daily lives trying to cope

with the challenges of HIVAIDS and all those who are affected by this

disease and to the new AIDS free generation

ACKNOWLEDGEMENTS

My sincere gratitude to all whose knowledge skills experience and support

went into this work First are the authors of various literatures whose work

guided this dissertation Overly important too are all those participants who

offered their resources and business experiences which has influenced the

outcome of this paper

To the University of Sheffield thanks for the opportunity to pursue this course

at your institution and the experts you provided to teach various aspects of the

course A lot of thanks to the course leader and my supervisor Dr Kendra

Albright for all the guidance and motivation she provided during the entire

programme Moreover for the opportunity she gave me to pursue this

research Thanks too to the rest of the tutors especially Dr Barry Eaglestone

who refined my research knowledge and skills Special thanks go to my

sponsor The Commonwealth Scholarship for providing funds for me to purse

my programme To my Administrator Dr Fiona Groccut and Sarah Ferdecio

thank you for the fast response you would give whenever I needed your help

A special thank you to Richard Campos the Managing Director for

RCBusiness Support Ltd for the support you throughout this project

I could not do without the invaluable family support from my sister Juliet

Shadreck and my mom Monica Boniface thank you mum Particular thanks

to Theo my daughter who I left at a tender age to come and pursue this

vi

course To Gobonaone Keaosenya thanks for your moral and emotional

support you gave during my studies To my family Lebo Kay Goitse Kgosi

Monica Jullie Douglas and all other friends not mentioned thanks for your

moral support Thanks to my family for their prayers and support

Thanks too to all my MSc in Information Systems classmates for sharing their

extensive and diverse knowledge skills and experiences during the course I

acknowledge friends and colleagues in Botswana who encouraged me to

pursue this programme particularly Dr Jorosi for the inspirational advice

Special thank to my sincere friend Patience Chakandinakira for her moral

supportTo Dr Phil Lyoka thank you for the editing and grammar corrections

and all the support you gave throughout this project

Due to technical limitations I am not able to list everyone but I OWE ALL OF

YOU who provided moral academic technical economic support or

otherwise a very BIG THANK YOU including whoever reads this work

vii

LIST OF ABBREVIATIONS

BIDPA Botswana Institute for Development Policy and Analysis BOI Board of Investment ESRC Economic And Social Research Council EPZ Export Processing Zones FDI Foreign Direct Investment GDP Gross Domestic Product GSP General System of Preferences IB International Business ICT Information Communication Technologies ILO International Labour Organisation IT Information Technology ISO International Organization for Standardization IVTB Industrial and Vocational Training Board MEDIA Mauritius Enterprise Development Investment Authority MNC Multinational Companies NAFTA North American Free Trade Agreement NHPA National Handicraft Promotion Agency OECD Organisation for Economic Co-operation and Development SADC Southern African Development Community SEHDA Small Enterprises amp Handicraft Development Authority SME Small and Medium Enterprise SMME Small medium and micro-enterprises SMIDO Small amp Medium industries Development Organisation UK United Kingdom UN United Nations USA United States of America WTO World Trade Organization

viii

LIST OF ILLUSTRATIONS TABLES Table 1 THE STUDY TIME SCALE

2 RESPONDENTS RATE ACCORDING TO SECTORS

3 AGE GROUP AS PER PARTICPANT

4 GENDER PROFILE

5 EDUCATION PROFILE 6 YEARS EMPLOYED AS CEO 7 COMPANY AGE PROFILE 8 NUMBER OF EMPLOYEES 9 ANNUAL SALES 10 OWNERSHIP

FIGURES 1 MAP OF MAURITIUS SHOWING ALL PROVINCES

2 MAURITIUS MAP SHOWING POLITCAL DIVISIONS

3 THE DYNAMIC OF TOP-DOWN-BOTTOM-UP PROCESS ACROSS LEVELS OF CULTURE

4 PUTZ MODEL FOR IMMIGRANT BUSINESS AND CULTURE

5 THE BASIC MECHANISM OF INTERNATIONALISATION-STATE AND CHANGE ASPECT

ix

ABSTRACT

In this new millennium few executives can afford to turn a blind eye to global

business opportunities The globalizing wind has broadened the mindsets of

executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories One such new

trajectory is the concern with national culture Whereas traditional IB research

has been concerned with economic legal issues and organizational forms and

structures the importance of national culture has become increasingly

important in the last two decades largely as a result of the classic work of

Hofstede (1980) National culture has been shown to impact on major

business activities from capital structure (Chui et al 2002) to group

performance (Gibson 1999)

The purpose of this study was to understand the concept on how to penetrate

a new international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

Data was collected through telephone interview web survey literature review

and face to face interview involving business managers legal stakeholders

and government officials and former government ministers About 17

telephone interviews were done with only government officials 4 face to face

interviews and 140 web survey interviews questions All the respondents were

x

randomly selected and respondents would suggest further participants Data

was put in to categories and themes and analysed according to those themes

Putz (2000) model was used as guide to selection of themes

Findings revealed the following 1 Language and religion are not a barrier to

foreign investment in Mauritius 2 Mauritius is a peaceful and tolerant nation

and most of its social life revolves around family and friends 3 Market

opportunities exits in the manufacturing industry offshore financial services

cyber culture and the construction industry 4 The country‟s business

economy faces stiff competition from Botswana South Africa and Vietnam 5

The government plays an important role in ensuring security for foreign

investors

From the results it was concluded that culture plays an important role in the

daily lives of the Mauritian people but it does not have a direct impact to

investment in Mauritius

1

CHAPTER ONE

INTRODUCTION

Globally Small and Medium Enterprises (SMEs) are increasingly regarded as

vital for diversifying economies through the creation of employment

(Machacha 2002 p 277) The OECD (2000) notes that small and medium-

sized enterprises account for 60-70 percent of jobs created in member

countries Southwood (2004) in discussing the status of the SME sector in

Africa observed that governments and large corporations dominated

economies of the countries yet the real engine of economic growth lay with

SMEs Muuka (2002 p 1) in discussing the SME sector in Africa noted that

the informal sector is huge due to the large numbers of employees it absorbed

as a consequence of inadequate jobs and opportunities in the formal sector

The author points out that in many African countries the informal sector is

estimated to employ from three to six times the number of employees in the

formal sector However very little has been documented through research

about this important sector

In Mauritius the Mauritian government believes that the real engine of

sustainable and equitable growth is in the SME sectors Not only is it of great

importance for the rate of job creation and income generation but also it

deserves particular attention since the sector has been largely neglected in

the past In this respect this study of Mauritius is important in addressing

some of issues of culture by using the International business as a framework

for this study to understand the business environment in Mauritius and the

potential for growth in a global perspective (Stone 1997)

2

In this new millennium few executives can afford to turn a blind eye to global

business opportunities Japanese auto-executives monitor carefully what their

European and Korean competitors are up to in getting a bigger slice of the

Chinese auto-market Executives of Hollywood movie studios need to weigh

the appeal of an expensive movie in Europe and Asia as much as in the US

before a firm commitment The globalizing wind has broadened the mindsets

of executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories

However research shows that as markets competition and organisations

globalise the business people businesses themselves and consumers

involved in these institutions increasingly have to interact manage negotiate

and compromise with people from different cultures (Hofstede 1997

Hoecklin 1995) Global business managers report that when doing business

overseas challenges mount For example structural conditions physical

social and economic arrangements can affect business operations and

outcomes as can the varied norms and behaviours that come with different

national cultures

One such new trajectory is the concern with national culture Whereas

traditional IB research has been concerned with economiclegal issues and

organizational forms and structures the importance of national culture

broadly defined as values beliefs norms and behavioral patterns of a

national group (Hofstede1980) has become increasingly important in the last

two decades largely as a result of the classic work of Hofstede (1980)

3

National culture has been shown to impact on major business activities from

capital structure (Chui et al 2002) to group performance (Gibson 1999) For

reviews see Boyacigiller and Adler (1991) and Earley and Gibson (2002)

Weisinger and Trauth (2003) report that culture evolves and takes unique

forms in local offices of organizations This means that culture is both dynamic

and situated in its local context Thus external conditions both structural and

cultural can influence global business Yet small and medium enterprise

(SMEs) managers can have an impact on how their organizations‟ cultures

evolve Therefore strategic leaders need to introduce unique norms values

and processes that fit together coherently in successful organizations

Therefore the main purpose of this case study is to explore and understand

the Small Medium Enterprise (SMEs) business environment in Mauritius and

how SMEs can penetrate the business culture there

The purpose of this paper is therefore to explore and understand how national

culture influences international business decisions and how to culture affects

international business investment using Mauritius as a case study

In this chapter the author outlines the background of the study specifies the

study objectives describes the significance of the study gives methodological

overview and finishes off by outlining definitions of key terminologies

4

11 Background to the Study

Strategically located in the Indian Ocean at the crossroads of Africa and Asia

Mauritius is reputed for its beautiful countryside and its 150 kilometres of white

sandy beaches and transparent lagoon A British colony that gained

independence in 1968 officially known as Republic of Mauritius the country is

positioned to the east of the Madagascar Islands The geographical

coordinates of the nation are 20ordm17 South latitude and 57ordm33 East longitude

The total area covered by the island nation is 2040 square kilometres

Mauritius enjoys a maritime sub-tropical climate and is therefore an all-year-

round holiday destination From a monocrop economy depending mainly on

sugar it has diversified its economic activities into textile and apparel

industry tourism and financial service Mauritius has witnessed a massive

development in the last decades (SMIDO 2006)

5

Figure 1 Map of Mauritius showing all Provinces

Source Encarta World atlas online

6

Figure 2 Mauritius map showing political divisions of the country

Source Maps of the world online

The research area was around the capital city Port Louis marked in red For

anonymity the site was just called A or B Administratively Mauritius is divided

into nine Provinces (figure 2)

The country is remarkable in its ethnic diversity It forms a unique mosaic of

immigrants from the Indian sub-continent Africa Europe and China The

cultural diversity and harmony of the island make Mauritius a unique place in

the world The various religions found on Mauritius tend to play a major part in

7

the islands cultural events and churches temples and mosques are to be

found everywhere Hindus make up approximately half of religiously affiliated

Mauritians followed by Muslims and Christianity as the minority It is also

known for its social peace political stability and racial harmony Its steady

economic growth over the years coupled with its nation‟s social cohesion and

prosperity ensure continuing development (Country Profile 2005)

The country is equipped with a highly skilled labour force to suit virtually all

business in two international languages English and French and a very good

infrastructure thereby attracting Foreign Direct Investment The average

economic growth was 56 over the last 3 years The income per Capita has

reached 4000 US Dollars As a result the standard of living has gone up The

country has now a life expectancy rate of 714yrs an adult literacy rate of 83

(Country Profile 2005)

To face globalisation and a new economic environment the Government has

taken several steps High value-added capital intensive and knowledge-

based activities are on the priority list The Information Technology sector is

undergoing rapid changes so as to be fit for the next millennium The aim is to

make Mauritius a centre for high-tech and software services which can be

exported (Commonwealth Secretariat 2006)

8

12 An Overview of Mauritian Economy

The economy of Mauritius has experienced major structural transformation

over the last two decades The country has moved away from a mono-crop

economy with fast population growth high unemployment and low per capita

income to one that is more dynamic and diversified The sources of

diversification have been agriculture export manufacturing (mainly textile)

tourism and more recently international services with Offshore and Freeport

activities (Country profile 2005)

To respond to the global competition in these sectors Mauritius has made

extensive use of modern technology to improve its productivity and efficiency

The real growth rates have been around 54 over the past four years and

Mauritius is now classified as a middle-income country and is one of the

healthiest economies in the whole African region (Country profile 2005) The

sugar sector provided the start-up capital for the Export Processing Zones

(EPZ) The rapid rate of growth of investment in the manufacturing sector

(investment grew by over 30 each year from 1983 until the late 1990s in this

sector) that led to the success of the EPZ and the Mauritian economy as a

whole This was made possible by the confidence of entrepreneurs and

foreign investors prevailing in the country at that particular time The private

sector accounts for approximately 70 of total capital formation in Mauritius

Investment rate stood around 27 in the four years ending 1996 peaking to

30 in 1994 (SMIDO 1996)

9

When the government recommended the diversification of the economy with

the creation of Export Processing Zones in the early 1980‟s the EPZ sector

benefits from duty-free and quota free access into European Union markets

granted under the Lomeacute Convention as well as tariff preferences granted

under the General System of Preferences (GSP) by countries such as North

America and Japan The mid 1980s witnessed a textile boom raising per

capita incomes and living standards However the conclusion of the Uruguay

Round (General Agreement on Trade amp Tariffs) implies the loss of guaranteed

markets and preferential access which will result in strong competition in

these respective markets (Country profile 2005)

The new strategy of the industrial sector aims at targeting high quality and

high value added products with a view to restoring the competitiveness of the

goods by applying latest technology to the manufacturing industry and hence

improving the quality of the finished products Limited data is available

regarding the SME sector in Mauritius The current research has observed

that there is little research in the field in SME sector in Mauritius

In view of the importance of foreign investment as a source of sustenance to

economic growth the government of Mauritius has taken a series of policy

measures to encourage its flows into manufacturing offshore banking and

financial services information technology communication and tourism As far

as foreign investors are concerned Mauritius offers itself as an attractive

destination because several positive features such as political stability

10

availability of skilled labour and investment-friendly rules and institutions

(Stone 1997)

With such a promising economy there is virtually no evidence on how to

penetrate the business culture in Mauritius and how culture can affect SMEs

and business opportunities therefore this study will explore and understand

the business environment in Mauritius and the challenges of doing business

there as a foreign investor Currently there is very little research done on

SMEs and culture in Mauritius

13 Mauritius SME Background

Experience shows that attitudes towards small business vary from decade to

the next from country to country Before the industrial revolution all business

was small business but with industrial and commercial expansion of

developed nations small has become medium and medium has become big

business

Business owners and managers have often seen growth as an end in itself

and at time the cry get big or get out has been heard in most nations

(Meredith 2004) For more than two decades SMEs have experienced

favourable growth SME has long been prominent in the countrys economy

and make up a large portion of national economy in terms of output

employment and effective utilisation of regional resources Small and medium

enterprises in Europe make up 998 of all European enterprises provide

66 of its jobs and account for 65 of its business turnover (Meredith 2004)

11

In developing countries SMEs account more than 90 of all enterprises

Over the last five years they have been responsible for more than 80 of job

created (Stone 1997) On the issue of job creation Stone (1997) found that

SMEs create more employment than large enterprises and with a lower

investment per job created SMEs are not usually associated with international

activity but they do in fact play a significant international role and their

importance appears to be increasing Available data on SMEs international

activity are very limited (Stone 1997)

In general terms and depending on the country SMEs contribute between

15 and 50 of exports and between 20 and 80 of SMEs are active

exporters Overall it is estimated that SMEs now contribute between 25 and

35 of world-manufactured exports (UN 2005) Increased exports not only

boost the level of sales and employment but also extend the life cycle of

goods and services

In Mauritius SMEs represent 19 according to a report issued by the

Commonwealth Secretariat entitled a Study of Small Firm export Policies

and Institutions in Mauritius Subsequently these SMEs have developed

gradually and move from their tradition orientated operations to export-led

firms probably due to improvement of technology in the field of communication

and the new economic dimension which prevailed

At this juncture it is important to report that few studies on culture and small

and medium entrepreneurship have been conducted on Sub-Saharan Africa

12

There is a paucity of information and even those scarce studies they do not

cover broad perspectives of the situation of SMEs in Sub-Saharan Africa

Therefore this study builds upon the existing limited body of research

regarding how business cultures contribute to the success or failure of small

and medium entrepreneurs In particular it explores the business culture in

Mauritius and its barriers to penetration for new and foreign small and

medium entrepreneurs

14 Purpose Statement

The purpose of this study was to understand the concept on how to penetrate

an international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

15 Aims and Objectives

To investigate the challenges of national cultural differences in

business in Mauritius

To investigate how to penetrate the business environment for a new

and or foreign business culture especially in Mauritius

To investigate business opportunities for SMEs in Mauritius and how

these can benefit the locals

13

16 Research Question

How can Small and Medium Enterprises penetrate the business culture in

Mauritius

These sub-questions all pertain to SMEs business

o 161 SUB-QUESTIONS

What kind of businesses are operating in Mauritius now

What are their business strategies (marketing brands) etc

What are the necessary mechanisms for establishing business in

Mauritius

What are the business needs of established and starting businesses

What are the mechanisms for potential growth of local business

What are the challenges for doing business in Mauritius

How much of business behaviour is influenced by the national culture

17 The Significance of the Study

The findings of the current study will increase the understanding of cultural

barriers to market penetration for SMEs in Mauritius The study adds

knowledge to the body of literature in this area focusing at further

improvement of understudying of culture and business issues The

study becomes part of the universitys education development in line with its

obligations to the communities and the country This research problem arose

from an information need of a particular client This research therefore will try

to explore the client‟s information need and probably contribute to the wealth

of knowledge

14

18 Definitions

CULTURE Hofstede (1997) defines culture as ldquothe collective programming of

the mind which distinguishes the members of one group or category of people

from anotherrdquo It is the norms beliefs and values common to a society

Culture is about the way people understand their world and make sense of it

It only when this is taken for granted assumptions are challenged that people

realise that they even exist (Hofstede 1997)

ENTERPRISE An enterprise is considered to be any entity engaged in an

economic activity irrespective of its legal form This includes in particular

self-employed persons and family businesses engaged in craft or other

activities and partnerships or associations regularly engaged in an economic

activity (European Commission 2003)

INTERNATIONAL BUSINESS International business consists of transactions

that are devised and carried out across national borders to satisfy the

objectives of individuals and organizations The Primary Types of International

Business Activities Are Importing and Exporting Direct Foreign Investment

(Govindarajan and Gupta 2001)

GLOBALISATION refers to a bdquogrowing economic interdependence among

countries as reflected in the increased cross-boarder flow of three types of

entities goods and services capital and knowhow‟ (Govindarajan and Gupta

2001 4)

15

SMALL AND MEDIUM INTERPRISES (SME) is made up of enterprises

which employ fewer than 250 persons and which have an annual turnover not

exceeding EUR 50 million andor an annual balance sheet total not

exceeding EUR 43 million (European Commission 2003)

In Mauritius an SME has been redefined taking into account the volume of

investment in equipment which was previously one million up to 10 millions

Mauritian Rupees presently to be classified as a small enterprises and with

less than 50 and 200 employees for small and medium scale respectively

(Stone 1997)

16

CHAPTER TWO

LITERATURE REVIEW

The aim of this chapter is to introduce conceptual themes that are important in

order to understand the role of culture in international business The chapter

discusses the context of relationship between culture and international

business practices in small and medium enterprises (SMEs) and the major

challenges they face in the area of globalisation A model adopted from Putz

(2000) forms a framework for articulating the conceptual role that culture has

in international business using Mauritius as a case study

21 Embracing Cultural change in an era of globalization

A significant theoretical issue for international business is the role of culture in

the whole aspect of information transformation Since the landmark study by

Haire et al (1966) and the publication of Industrialism and Industrial Man by

Kerr et al (1960) researchers have continued to search for similarities in

culturally specific beliefs and attitudes in various aspects of work related

attitudes as well as consumption patterns and other behaviours If cultures of

the various communities of the world are indeed converging (Heuer et al

1999) International Business (IB) related practices would likely become

increasingly similar For example standard culture-free business practices

would emerge and inefficiencies and complexities associated with divergent

beliefs and practices in the past era may disappear (Heuer et al 1999)

17

Studies elsewhere suggest that culture gets affected by globalization practices

in the current 21st century Globalization has seen flows of information

technology money and people and is conducted via international

government organizations such as the African Union the North American

Free Trade Agreement (NAFTA) and the European Community global

organizations such as the International Organization for Standardization

(ISO) multinational companies (MNCs) Also includes cross-boarder alliances

in the form of joint ventures international mergers and acquisitions These

interrelationships have enhanced participation in the world economy and

have become a key to domestic economic growth and prosperity (Drucker

1995 153)

Literature suggests that because globalization tends to redistribute economic

rewards in a non-uniform pattern a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) Strong opposition to

globalization usually originates from developing countries that have been

affected by the destabilizing effects of globalisation However in recent years

there have been heated debates in Western economies triggered by

significant loss of professional jobs as a result of offshoring to low wage

countries (Schaeffer 2003)

Workers in manufacturing and farming in advanced economies are becoming

increasingly wary of globalization as their income continues to decline

18

significantly In parallel to the angry protests against globalization the flow of

goods services and investments across national boarders has continued to

fall after the rapid gains of the 1990s The creation of regional trade blocs

such as NAFTA the European Union and the Association of Southeast Asian

Nations have stimulated discussions about creating other trade zones

involving countries in South Asia Africa and other parts of the world

Although it is often assumed that countries belonging to the World Trade

Organization (WTO) have embraced globalization the fact is that the world is

only partially globalized at best (Schaeffer 2003)

Many parts of Central Asia and Eastern Europe including the former

republics of the Soviet Union parts of Latin America Africa and parts of

South Asia have raised heightened scepticism about globalization (Greider

1997) In fact less than 10 of the world‟s population are fully globalized (ie

being active participants in the consumption of global products and services)

(Schaeffer 2003)

According to Guile`n (2001) these trends might indicate that globalization is

being impeded by tendencies towards country-specific modes of economic

development making the convergence of IB-related values and practices

difficult to achieve Hofstede (1980)‟s favourite definition of f ldquoculturerdquo is

precisely that its essence is ldquocollective mental programmingrdquo it is that part of

peoples conditioning that they share with other members of their nation

region or group but not with members of other nations regions or groups

Hofstede (2001) asserts that these mental programs of people around the

19

world do not change rapidly but remain rather consistent over time His

findings tend to suggest that cultural shifts are relative as opposed to

absolute Although clusters of some countries in given geographical locales

(eg Argentina Brazil Chile) might indicate significant culture shifts towards

embracing Anglo values the changes do not diminish the absolute differences

between such countries and those of the Anglo countries (ie US Canada

UK)

According to Hofstede (1980) Examples of differences in mental

programming between members of different nations can be observed all

around us One source of difference is of course language and all that

comes with it but there is much more In Europe British people will form a

neat queue whenever they have to wait not so the French Dutch people will

as a rule greet strangers when they enter a small closed space like a railway

compartment doctor‟s waiting room or lift not so the Belgians Austrians will

wait at a red pedestrian traffic light even when there is no traffic not so with

the Dutch Swiss tend to become very angry when somebody-say a foreigner

makes a mistake in traffic not so with the Swedes All these are part of an

invisible set of mental programs which belongs to these countries‟ national

cultures Such cultural programs are difficult to change unless detaches the

individual from his or her culture Within a nation or a part of it culture

changes only slowly (Hofstede 1980)

20

This is the more so because what is in the minds of the people has also

become crystallized in the institutions namely government legal systems

educational systems industrial relations systems family structures religious

organizations sports clubs settlement patterns literature architecture and

even in scientific theories All these reflect traditions and common ways of

thinking which are rooted in the common culture but may be different for other

cultures (Hofstede 1980)

22 The dynamics of Culture as a Multi-level Multi- layer construct

Multi-level approaches of viewing culture as a multi-level construct that

consists of various levels nested within each other from the most macro level

of a global culture through national cultures organisational cultures group

cultures and cultural values represented the self aspect of the individual See

figure 3

21

Figure 3 The dynamic of top-down-bottom up process across levels of

culture (Source Schein 1992)

The model proposes that culture as multi-layer construct exist at all levels

from global to the individual Changes that take place at the external layer of

behaviour are most likely shared by individuals who belong to the same

cultural background level hence characterising the aggregated unit (Schein

1992)

Top-

Down

Individual

Behaviour

Values

Assumptions

Global Culture

National Culture

Organizational Culture

Group Culture

Bottom

Up

22

Below the global level are nested organizational layers or networks at the

national level with their local cultures varying from one nation or network to

another Further down are local organizations and although all of them share

some common values of their national culture they vary in their local

organizational cultures which are also shaped by the type of industry that

they represent the type of ownership the values of the founders etc Within

each organization are sub-units and groups that share common national and

organizational cultures but differ from each other in their unit culture based on

differences in functions of their leaders‟ values and the professional and

educational level of their members At the bottom of this structure are

individuals who through the process of socialization acquire the cultural values

transmitted to them from higher levels of culture Individuals who belong to the

same group share the same values that differentiate them from other groups

and create a group-level culture through a bottom-up process of aggregation

of shared values (Schein 1992)

Both top-down and bottom-up processes reflect the dynamic nature of culture

and explain how culture at different levels is being shaped and reshaped by

changes that occur at other levels either above it through top-down

processes or below it through bottom-up processes(Schein 1992) Similarly

changes at each level affect lower levels through a top-down process and

upper levels through a bottom-up process of aggregation The changes in

national cultures observed by Inglehart and Baker (2000) could serve as an

23

example for top-down effects of economic growth enhanced by globalization

on a cultural shift from traditional values to modernization

In view of the complexity of the organizational structures specific

organizational structures that have global character need to be established so

as to adopt common rules and procedures in order to have a common

bdquolanguage‟ for communicating across cultural borders (Kostova 1999 Kostova

and Roth 2003 Gupta and Govindarajan 2000)

Given the dominance of Western Multi National Companies (MNCs) the

values that dominate the global context are often based on a free market

economy democracy acceptance and tolerance of diversity respect of

freedom of choice individual rights and openness to change (Gupta and

Govindarajan 2000) The multi-level structure explains how a lower-level

culture is being transformed by top-down effects and that the cultural layer

that changes first is the most external layer of behaviour In the long run

bottom-up processes of shared behaviours and norms would affect the local

organizational culture as well (Schein 1992)

23 International Business and Culture

Knowledge of cultural differences is one of the key components in

international business practices and success Improving levels of cultural

awareness can help companies build international competencies and enable

individuals to become more globally sensitive (Hofstede 2003) Indeed

cultural differences contribute towards different ways people behave in

24

business Research in the field of international management underscores that

the attributes of cultural knowledge used by a firm play an important role in the

firms expansion For example Martin and Salomon (2003) found that cultural

orientation in entrepreneurial action is a central theme and can serve as a

starting point for immigrant business

ldquoUnderstanding the culture and the conceptualisation of culture in conjunction with entrepreneurial action is a critical issue when doing business in an international environment Contributions of economic geography inspired by the cultural turn which shows alternative ways of thinking about the connection between culture and economy by using a new understanding of culture are also critical (pg 198)rdquo

The statement underscores the important of understanding the culture of a

society before attempting to do business there otherwise the company runs a

risk of going out of business The ways in which different groups of people

interpret their environment and organise their activities is based the on the

specific cultural values and assumptions Certain values often thought to be

universal really do differ from culture to culture What constitutes an ethical

business practice is not the same everywhere This can be an enormously

difficult area in managing business across cultures (Straub et al 2002)

Although one may claim cultural differences to be going away they are

actually being absorbed in the business practices This makes it more critical

than ever to try to understand different cultures and their influence on the

ways people do business and view the world The costs of not understanding

are getting greater than ever The essence of culture is not what is visible on

the surface It is the shared views about what people understand and interpret

25

the world These cultural differences are crucial influences on interactions

between people working and managing across culture (Gertler 1997)

The social behaviour of a society is embedded in a particular context and is

connected to other deeply held values and beliefs (Weisinger and Trauth

2003) This means that the stakes are high for mismanaging cultural

differences Ignoring or mishandling differences can result in an inability to

retain and motivate employees a misreading of the potential of cross-border

alliances marketing and advertising blunders and failure to build sustainable

sources for competitive advantage Mismanaging cultural differences can

render otherwise successful managers and organisations ineffective and

frustrated when working across cultures (Weisinger and Trauth 2003)

24 Putz Model For Immigrant Business and Culture

Literature in the field of Immigrant Business differentiates mainly between two

basic approaches each with a different emphasis which are combined to

explain entrepreneurial action of immigrants (Putz 2000) The first approach

emphasis the bdquoopportunities‟ offered by the host country including access to

the market and job market conditions The second approach focuses on the

bdquoresources‟ of migrant groups from whom the concept of culture becomes

essential (see Figure 1 below)The Putz (2000) cultural model below is a

summary of explanatory approaches following the assumption that self

employment of certain groups is the result of their specific cultural

predisposition which favours business activity

According to Putz‟s (2000) view of cultural model the bdquoopportunities‟

approach which refers to market possibilities as an explanation for self

26

employment of immigrants assume that there are certain market segments

with favourable development perspectives especially for immigrant groups

Here two factors receive special attention which are niche markets and legal

and institutional frameworks Niche markets make the establishing of business

by immigrants easier because their needs for consumer goods create specific

demand Legal and institutional frameworks gain awareness in international

comparative studies through restrictions specified by a country regarding

business permits and regulations these frameworks influence both the extend

and the sectored structure of the bdquoimmigrant business‟ (Putz 2000)

According to Putz (2000) the observation that most immigrant groups show a

higher level of self employment rate than others often forms the background

explanation which focus on opportunities created by the host society

Resource models stress the shared characteristics of migrants of same origin

Resources models explain that certain groups have specific cultural

resources which make it easier for members of that group to become self

employed therefore one can distinguish between the cultural traditions and

socialethnic networks ( Putz 2000)

27

Figure 4 Dominating models concept of bdquoImmigrant Business‟ (Source Putz

2000)

OPPORTUNITIES

Market Access

Possibilities

Market Conditions

Niche Markets

lsquoOpenrsquo Markets

Job Market

Conditions

Access

Vertical Mobility

Legal and Institutional

Frameworks

lsquoEthnicrsquo

Business

RESOURCES

lsquoClass Resourcesrsquo lsquoCultural Resourcesrsquo

Cultural

Traditions

Social lsquoEthnicrsquo

Resources

28

When successfully managed differences in culture can lead to innovative

business practices faster and better learning within the organisation and

sustainable sources of competitive advantage (Sondergaard and Hofstede‟s

1994) In relation to that the current study argues that managers need to

study and understand the culture and the niche market before investing This

assumption has been raised as a result of the previously reported experiences

and research findings already reported so far It is therefore critically important

to understand that every society has got its own way of behaving which needs

to be understood if the business is to succeed Operating companies need to

understand what their business means to the people of the given community

and their culture

Several studies of international business have indicated that

internationalization of the firms is a process in which the firms gradually

increase their international involvement(Johanson amp Wiedersheiml 1995

Gibson 1999 Chui et al 2002 ) It seems reasonable to assume that

within the frame of economic and business factors the characteristics of this

process influence the pattern and pace of internationalization of firms Figure

5 below shows a model of the internationalization process of the firm that

focuses on the development of the individual firm and particularly on its

gradual acquisition integration and use of knowledge about foreign markets

and operations and on its successively increasing commitment to foreign

markets The basic assumptions of the model are that lack of such knowledge

is an important obstacle to the development of international operations and

that the necessary knowledge can be acquired mainly through operations

abroad (Johanson and Wiedersheiml1995)

29

FIGURE 5 The Basic Mechanism of Internalisation- State and Change Aspects

Figure 5 Basic Mechanism of Internalisation (Source Johanson amp

Wiedersheiml 1995)

Market knowledge and market commitment are assumed to affect both

commitment decisions and the way current activities are performed These in

turn change knowledge and commitment ( Aharoni 1966) In the model it is

assumed that the firm strives to increase its long-term profit which is

assumed to be equivalent to growth (Williamson 1966) The firm is also

striving to keep risk-taking at a low level These strivings are assumed to

characterize decision-making on all levels of the firm Given these premises

and the state of the economic and business factors which constitute the frame

in which a decision is taken the model assumes that the state of

internationalization affects perceived opportunities and risks which in turn

influence commitment decisions and current activities (Johanson amp

Wiedersheiml 1995)

Market

Knowledge

Market

Commitment

Commitment

Decisions

Current

Activities

30

2 5 The Role Of Information Communication Technologies

Hofstede (2001) observed that not only will cultural diversity among countries

persist but also new technologies might even intensify the cultural differences

between and within countries Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

Information communication technologies (ICTs) enable users to access varied

amounts of information globally however it does not necessarily increase

their capacity to absorb the information at the same rate as the information is

disseminated or diffused (Bhagat et al 2002) In addition information and

knowledge are interpreted through cultural lenses and the transfer or diffusion

of organizational knowledge is not easy to accomplish across cultural

boundaries (Bhagat et al 2002)

Ethnic groups around the world observe the lifestyles and cultural values of

other countries and some are interested in adopting part of the lifestyle and

values but others reject it completely (Kirkman and Shapiro 2000) The

effects of new technologies on improving efficiencies of multinational and

global corporations are well known but it is not known how these new

technologies especially computer-mediated communication and the Internet

31

might create significant shifts in the cultural patterns of different ethnic groups

(Kirkman and Shapiro 2000) or on their ways of doing business

In essence there in need to explore how the spread of ICTs is affecting the

progress of globalization in different parts of the world by incorporating the

role of cultural syndromes organizational cultures and other processes

which has recently been attempted by scholars such as Bhagat et al (2003)

and Gibson and Cohen (2003)

Information and Communications Technology (ICT) has become a catchword

with different interpretations and viewpoints even among experts As the

name suggests ICT encompasses all the technology that facilitates the

processing transfer and exchange of information and communication

services In principle ICTs have always been available since the advent of the

printing press The only difference is that from the late twentieth century rapid

advances in technology changed the traditional ways in which information was

processed communications conducted and services available (Adu 2002)

These technological advances have changed business operations and the

way people communicate They have introduced new efficiencies in old

services as well as numerous new ones One could even imagine going as far

as replacing the term Post-industrial Society with ldquoInformation Society that

is a society where the ability to access search use create and exchange

information is the key for individual and collective well-being (Kaplan 2001)

32

Globally entrepreneurship is considered as the engine of economic

development The SME sector has the potential to address socio-economic

challenges facing both developing and developed countries Without small

business development it is argued that economies stagnate unemployment

levels continue to rise and the general standard of living deteriorates

Information and communications technology (ICT) has been identified as a

major area of need to develop the SME sector in areas of information

provision access to national and international markets and other areas of

business development and support ( Ferrand and Havers 1999)

ICTs enable entrepreneurs to manage their businesses efficiently and thus

enhancing their competitiveness in the global market They can increase their

geographic reach improve efficiency in procurement and production and

improve customer communications and management For these reasons the

need to encourage and accelerate the uptake and optimal application of ICTs

by SMEs in different sectors of the economy cannot be overemphasized

(Ramsay et al 2003) The ICT sector has the potential to absorb prospective

entrepreneurs considering various business opportunities offered by the

sector Some of the business opportunities available within the sector relate to

systems integration application development database administration web

design and internet service provision The sector is also seen as an area with

major opportunities for the historically disadvantaged sectors of the

population It therefore becomes imperative for government to provide

mechanisms to accelerate the entry of SMMEs into the ICT sector (ILO 2001)

33

26 Cross Culture and International Business

Cross-cultural management advice rests on several assumptions in the

tradition of Hofstede (1997) that a) that national culture is comprised of norms

and values that can be readily identified and addressed b) that these norms

values and patterns of behaviour are stable and change at an extremely slow

pace and c) that national culture predominates over organizational culture

epistemic culture gender or other determinants of attitudes and behaviour

According to Hosftede (1997) national culture is comprised of norms and

values that can be readily identified and addressed

Organisational culture (common values and attitudes) affects organizational

success and innovation develops over time and may be difficult to change

ldquoThere is a relationship between an organization‟s culture and its

performance The pervasive nature of organizational culture means that if

change is to be brought about successfully this is likely to involve changes to

culturerdquo (Mullins 1999)

An alternative view sees culture as more complex context-specific and

dynamic For example Weisinger and Trauth (2003) examined the interaction

of national cultures the IT industry culture and a particular firm‟s

organizational culture They observed that the resulting situated culture ldquois

fluid contextually dependent and created by actors within a group who may

hold conflicting assumptions and world viewsrdquo In other words culture is as

what it is because of what it does This means that management must ensure

34

that key capabilities for example marketing analytics or process controls are

developed and nurtured across the organization

Successful global managers recognize that they cannot respond to every

unique opportunity that local settings offer Thus there is an inherent tension

in cultural sensitivity a management team which is ldquotoo sensitiverdquo to cultural

and structural features exposes the organization to the risks that come with a

lack of focus and coherence while managers who do not take cultural and

structural features into account expose the organization to the risks that come

with organizational rigidity (Myres and Tan 2002)

According to Mistry (1999) entrepreneurial networks and clusters in sub-

Saharan Africa have not generally produced the kind of strong transnational

links that characterize Asia‟s flourishing pattern of industrial diffusion The

author states that the reasons for this are complex differences in geography

different models provided by leading countries in the neighbourhood and

policies adopted by governments in the respective regions Chinese business

networks are responsible for some of the information ideas and capital that

helped launch the small Indian Ocean nation of Mauritius as an important

centre for export-oriented industry The Chinese networks in Mauritius also

continue to facilitate a role that Mauritius first began to play in the eighteenth

century they serve as a gateway for overseas Chinese entrepreneurs

interested in investing both in Mauritius and elsewhere in Africa (Mistry 1999)

35

27 Investing in Mauritius

There are a lot of advantages in investing in Mauritius The economy of the

country is stable and the graph of the economy and business is one the rise

for a considerable period of time The Mauritius government has undertaken a

sequence of strategic measures to support its course into offshore banking

manufacturing and financial services communication technology and tourism

keeping in mind the significance of foreign investment as a basis of

nourishment of the financial development (Dabee and Greenaway 2001)

According to Dabee and Greenaway (2001) tthere are various factors that

influence financiers to invest in Mauritius like accessibility of skilled labor

political constancy and venture-friendly institutions and regulations One of

the major factors for the development of Mauritius is the Foreign Direct

Investment (FDI) The government of Mauritius has given all the necessary

support to create the most favorable investment setting by the following steps

Building modern infrastructure

Endorsing suitable legislations

Commencing packages of investment inducements

Investing in human capital

Some of the advantages of investing in Mauritius are as follows

High-quality infrastructure with superb transportation

Democracy and a steady government

Free market financial system fastened on export slanting activities

Excellent system of sea and air transport

36

High standard of living good international schools

A highly educated bilingual and responsive work force

Knowledgeable financial segment providing outstanding services

Constructive market contact and good inducements ( IBP 2002)

Mauritius has various sectors where investment can be made like Information

and Communication Technology and manufacturing For doing business in

Mauritius registered trademark is required The trade marks for business are

issued by the registered Patents and Trademarks sector of Ministry of Foreign

Affairs International Trade and Cooperation In the country of Mauritius a

foreigner is eligible to hold 100 shares In this case one of the directors of

the company has to inhabit in Mauritius and the foreign individual has to

obtain a sanction from the Office of Prime Minister (IBP 2002)

In Mauritius the laws concerning income tax is based on the English law of

income tax The companies in Mauritius are lawfully accountable to pay out

income tax on their profits at an even rate of 25 A company which is

included in the country or has its scheming benefit in the country is measured

for tax reasons to be an occupant corporation To the Mauritius companies

various types of tax incentives are granted The companies that hold

certificate for Tax inducement are responsible to tax at an abridged rate of

15 while the scheduled companies are accountable to pay tax at the rate of

25 ( Dabee and Grrenaway 2001)

37

CHAPTER THREE

METHODOLOGY

Having looked at culture to some depth this chapter explains the methods

used in carrying out the study The study used mixed method approach to

allow for data corroboration and dynamism since the subject in question

needed dynamism and sensitivity in approach

This research mixed both qualitative and quantitative approaches to try and

get best possible research by combining both features because they

complement each other Quantitative data techniques condense data in order

to get a bigger picture whereas qualitative techniques are data enhancers

making it possible to see issues more clearly (Dawson 2002 Neuman 2000)

Attempt was made to keep in line with recommendation made in the Leeds

Declaration proposition number 6 which calls for the application of multiple

methods and perspectives to try and understand social and cultural issues

(Hunter and Lang 1993) Mixing qualitative and quantitative methods also

called positivist and interpretive respectively (Gilbert 2001 and Bowling 2002)

is effective in a complex issue study such as this one because they highlight

different perspectives of the same problem in this case - the public in parallel

with the individual level(Gilbert 2001) This is because quantitative methods

adopt a numerical approach to data collection and analysis to provide macro

level perspective whereas qualitative methods provide micro level perspective

through collecting data from individuals (Ibid)

38

There was also use of impersonal (public) documentation using official

records which were more library based research (Grbich 1999) on top of

theory generating field based methods (Ibid) Many researchers (Bowling

2002 Neuman 2000 Grbich 1999 Denscombe 2003 and Gilbert 2001)

concur that neither of the methods is superior to the other but just different

each having its strengths and weaknesses (Dawson 2002)

The study sought to explore the attitudes behaviour subjective meanings and

experiences of the participants making qualitative approaches best suited

because they emphasize the importance of context (Neuman 2000) However

to generate objective and factual (Maynard and Purvis 1994) statistical

figures quantitative research was more suitable Hence mixing of methods

(Dawson 2002 Denscombe 2003) to counteract weaknesses in both

approaches to give breadth and width to the study (Maynard and Purvis

1994) The flexibility of qualitative research allowed for re-focusing and

refinement of the tool dependent on participants‟ reactions throughout

(Neuman 2000) to pick up any emerging evidence thus applying the

grounded theory approach (Dawson 2002)

39

31 Research Setting

Mauritius is a volcanic island of lagoons and palm-fringed beaches in the

Indian Ocean Southern Africa east of Madagascar with a population of

about 12 million has a reputation for stability and racial harmony among its

mixed population of Asians Europeans and Africans The island has

maintained one of the developing worlds most successful democracies and

has enjoyed years of constitutional order since independence in1968 Over

the past three and half decades the country has been transformed from one

of the poorest in the world to a middle income country with per capita Gross

Domestic Product US $7000 (World Bank 2006) It has preserved its image

as one of Africas few social and economic success countries that mainly

depends on sugar and clothing export and a centre for upmarket tourism But

Mauritian exports have been hit by strong competition from low-cost textile

producers and the loss of sugar subsidies from Europe Consequently

attention has turned to diversification in line with global trends

To this end SMEs have been identified as important instruments to achieve

economic diversification Today the government vigorously supports SMEs

through a range of strategies eg the creation of a business friendly climate

via import liberalisation tax reforms and the launch of the SME Partnership

fund which gives subsidized loans to aspirant SME owners and makes the

availability of finance and facilitating access in particular for those enterprises

that have viable projects but are short of equity The Small Enterprises amp

Handicraft Development Authority (SEHDA) was created following the merger

of the Small amp Medium industries Development Organisation (SMIDO) and the

National Handicraft Promotion Agency (NHPA) The aim of the merger is to

40

rationalize and optimize the use of resources dedicated to the small business

sector in Mauritius

Various cultures and traditions flourish in peace though Mauritian Creoles

descendants of African slaves who make up a third of the population live in

poverty and complain of discrimination Mauritius was uninhabited when the

Dutch took possession in 1598 Abandoned in 1710 it was taken over by the

French in 1715 and seized by the British in 1810 The culture of the country

reflects its diverse ethnic composition There are many religious festivals

some important ones being (in random order) Divali (the hindu festival of

lights in October) Christmas Cavadee (a penitence festival of the south

Indian tradition of hinduism in January) Eid ul Fitr (celebrating the end of the

period of fasting in Islam As the Islamic calendar does not correspond to the

Gregorian calendar the date of its celebration in the year tends to vary In

2003 it was celebrated in November) With such a strong history diverse

culture and such a promising economy painted above makes Mauritius a rich

setting to investigate culture and small medium business entrepreneurship

32 Methods

As justified already this study applied method mix to exploit the benefits of all

methods used while minimising the effects of their weaknesses The obvious

benefit of method mix is that it involves more data which is likely to improve

the quality of research (Denscombe 2003) and that is what the researcher

sought to achieve In deciding which method to use it was acknowledged that

the chosen methods were not superior in any way but more suited to the study

41

circumstances based on the premise of ldquohorses for courses (Denscombe

2003 page 83)

A Questionnaire used in the online web survey allowed for collection of

data from large numbers of participants economically since the project had

financial and time limitations (Ibid) The other advantage of survey exploited is

generation of quantitative data However weaknesses of the method

(empiricism lack of depth and accuracy of responses) were a challenge The

questionnaire was open ended and was completed by the participant in the

absence of the researcher Any questions arising from the participant not

understanding or misinterpreting the question where not taken care of Focus

groups were used to gain depth into some of the emerging issues from

questionnaires to gain insights into the issues surrounding widow inheritance

and to validate some of the data (Denscombe 2003) Telephone and face to

face interviews were used to gather to gain in-depth information on the

issues

All accessible literature on culture and investment in Mauritius as well as

other parts of Africa was reviewed to get insight into any related work to

identify key issues and current knowledge gap so as to sign post this study for

any audience (Ibid)

42

33 Research Participants and sampling

It was difficult to get exact demographic data for each sector Consequently it

was not possible to use any scientific sampling techniques The study

therefore used non-probability sampling (Neuman 2002 Bowling 2002

Denscombe 2003) targeting urban based population

The sample baseline characteristics were

SME managers from aged 18 years and above and over 65 was the

limit Any religion faith Any socio-economic background and residents

of Port Luis and surrounding areas

To sample for quantitative data purposive and snowballing sampling

techniques were used because it was not possible to apply any statistical

formula in getting the samples since there was no single list of SME managers

and other stakeholders to use with any form of probability sampling

Participants were snowballed from one sector to another until the whole

sectors were covered For the focus groups homogenous and critical case

(Grbich 1999) sampling was used to get particular sub group to provide

details In this case to get government officials and the private sector who

were strong enough to talk about their experiences

A total of 161 participants were reached from all the sectors These included

SME manager government officials and the private sector The researcher

wishes to point out that these numbers were not conclusive The numbers

could be much higher because in case the researcher phoned the participants

they were not available to take the call there was no time to go back to

43

ascertain the details Those who were not willing to take part in the study were

also excluded from the above figures For the focus groups discussions 5

government officials and the private widows were invited and used Skype

technology to do a conference

The times when the participants were contacted met were entirely dependent

on participant availability and other events at the time (Gilbert 2001) It varied

between 800 am and 700 pm in the evening because of the time differences

UK and Mauritius time Care was taken to avoid compromising times such as

late in the evening or culturally sensitive days such as weekends when people

were engaged in funerals and church services in this case

The participants showed weariness towards the study because as they put it

ldquoa lot of people come along claiming to collect data to help but never show up

againrdquo

34 Data collection Instruments

The researcher developed an online quantitative data collection questionnaire

(web survey form) which was posted on the university web server with help of

the department technicians A multiple recipient list was created from the

details in the SEHDA website and was randomly sent to the recipients These

only included the SME managers from the seven sectors About 20 contacts

were selected from each sector which made a total of 140 participants

Telephone interviews were made to about 17 government officials and the

private sector who were later divide n to focus groups and a teleconferencing

44

was organised on Skype Face to face interviews were done with government

officials from the Mauritian High Commission in the UK

Apart from the questionnaire an Olympus VN 2100 PC Digital Voice Recorder

was also used during the focus group discussion with the permission of

participants also on telephone interviews and face to face interviews This

was tested set and correctly positioned by the telephone speaker before the

session began to ensure proper functioning It was fitted with a mini

microphone to improve recording quality The digital voice recorder small in

size (only 68 grams in weight) proved user friendly because it was not

intruding too much into the face of participants as opposed to older recording

devices There was a pair of AAA batteries on standby in case the batteries in

use ran flat during the session

35 Ethical Considerations

This study involved very little of sensitive issues but it strived very much to

adhere to the fundamental principles of Human Research Ethics of Respect

for Persons Beneficence and Justice The researcher ensured autonomy self

determination and protection of vulnerable persons through informed consent

participation confidentiality and thorough explanation of what the research

was all about to those with limited knowledge and education Any risk that

might have resulted from the study was minimised as much as practically

possible and the researcher took full responsibility for the protection of

participants There was no form of discrimination other than on participant

baseline characteristics

45

The study also upheld the six key ethical research principles as stipulated by

ESRC - UK (ESRC 2005) To ensure anonymity pseudonyms were used for

participants The information gathered was safely protected through password

use on the computer system and only the researcher had access to the

information The researcher was responsible for storage and destruction of

any information no longer needed such as audio files after transcription

Research respondents participated in a voluntary way free from any coercion

and free to withdraw at any point should they felt uncomfortable

The first ethical committee whose approval was sought was the University of

Sheffield Ethical committee after which the researcher sought ethical approval

from Mauritian authorities through the relevant ministries It was not straight

forward getting ethical approvals in Mauritian but ultimately the ministry of

SMEs approval was obtained

36 Procedure

After all the necessary approvals were obtained the researcher wrote an

explanatory letter (Grbich 1999) or bdquoparticipant‟s information sheet‟ (appendix

5) which included information on informed consent (Denscombe 2003)

After piloting the tools the researcher started by making calls to make

appointment for interviews As the quantitative data collection went on

recruitment of participants to take part in qualitative aspect was done

simultaneously due to time constraints The researcher used individual

judgement to asses those participants who would be courageous enough to

respond to the questionnaire online and to the interviews The managing

46

director for RCBusiness Support Ltd also provided a number of potential

respondents who were used at the initial stages of the study Each interview

session lasted averagely 50 minutes The researcher went to organise the

teleconferencing for the focus group on Skype which also lasted for average

50 minutes

37 Data Analysis

Since the distinction between quantitative and qualitative research is not

watertight (Denscombe 2003) data analysis embraced both because they

have similarities and differences (Neuman 2000) There was analysis of

words and numbers thus holistic versus specific focus (Denscombe 2003)

The analysis adopted a five stages approach (Denscombe 2007) The first

stage was data preparation followed by data exploration analysis

presentation and finally validation

Though some researchers champion for advanced inferential statistics

(Denscombe 2007) the researcher opted for descriptive statistics for the

quantitative data analysis because they still remain effective ways of data

analysis and presentation (ibid) The research data involved nominal as well

as discrete and continuous data which could effectively be analysed using the

chosen method The data was grouped frequencies were described and

finally any linkages were identified The end product of the analysis process

is presented in the results section in various formats Basic statistical

techniques were used to give the data additional credibility in terms of

interpretations of the findings (Denscombe 2007)

47

For the qualitative data the first thing was to back up the original voice

recorded focus group discussion into a password protected lap top This

ensured not only the security of the data but also a back up in case of data

loss The researcher then listened to the recording several times to familiarise

himself with the data after which transcription took place After that the data

was interpreted and categories themes were identified since thematic

analysis was employed The Putz (2000) model was used as a guide to

finding themes The findings are presented in the results section

38 Planned programme of dissemination

The study findings were disseminated to all relevant stakeholders in print

format including the university as part of the postgraduate degree requirement

in academically fulfilling format Two copies of the report were sent to the

Ministry of SMEs in Mauritius and two copies to the Board of Investment of

Mauritius in the UK as part of the requirements of ethical approval and

research permission granted by the ministry

Finally it was hoped that the report would meet publication requirements so

that it could get a wider audience through a reputable journal

48

39 Time scale

The study was anticipated to take the following breakdown from the time all

ethical approvals and consent were obtained

Table 1 Table showing the study time scale

Stage Time allocation Action item Accountable person

I Weeks 1 - 3 Research set up Sampling and

access to participant negotiations

Angelinah Boniface

II Weeks 4 - 12 Data collection and Analysis Angelinah Boniface

III Weeks 12 - 16 Analysis Report writing and

dissemination

Angelinah Boniface

310 Limitations and Delimitations

This study was not fully funded as such high telephone costs travelling

affected the exercise Only business people in Mauritius both men and women

were interviewed The study covered both local and foreign investors

Participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

49

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

A major limitation is a low response rate of the questionnaire and therefore a

representative sample of the SME population was not achieved Thus any

conclusions made from the analysis of the collected data cannot be

generalized to the broader SME population Bias may have been inadvertently

introduced during interviewing caused from such things as leading questions

50

CHAPTER 4

RESEARCH FINDINGS AND DISCUSSION This chapter aims to discus the research findings from the study The chapter

is divided into two sections the first part presents and discusses the

quantitative data and the second part discusses qualitative It is therefore

worth mentioning that the Putz (2000) model was used to guide the

qualitative data analysis and some of the themes were taken from the model

and some were generated from the research findings It must be noted that

any findings uncovered from this study cannot be generalized to the broad

public domain regarding SMEs

Section A of the questionnaire and the interview guide included questions that

collected background information on the SME managers and the responding

firms These data constitute the substantive material for analysis in the

ensuing sections The tables below depict the socio demographic

characteristics of the survey participants age group gender educational level

and experience as ownermanager In the following sections there aspects

are discussed

51

41 RESPONDENTS RATE ACCORDING TO SECTORS

TABLE 2

SECTOR SEHDAS SURVEY SENT

SURVEY RECEIVED

RESPONSE RATE

Leather and Garments

1678 20 12 60

Wood and Furniture

2196 20 11 55

Paper Products and Printing

1541 20 9 45

Chemical Rubber and Plastic

1376 20 11 55

Pottery and Ceramic

793 20

17 85

Jewellery and Related Items

1674 20 13 65

Fabricated Metal Products

1267 20 14 70

TOTAL 7 140 101 72

Table 2 shows the response rates from various sectors of SME in Mauritius

which were targeted by the online survey As the table indicates pottery and

ceramic sub sector had the highest response rate (85) with paper products

sector giving the least response rate (45) Overall 72 response rate from

all the targeted sectors was satisfactory It is worth mentioning that the total

number of participants adds to 140 since this question was only directed to

sectors not to other stakeholder in the research sample

52

42 DEMOGRAPHIC PROFILE PARTICIPANTS

TABLE 3 AGE GROUP AS PER PARTICPANT

AGE GROUP FREQUENCY PERCENTAGE

-25 7 43

26-35 34 211

36-45 53 329

46-55 35 217

56-65 22 137

gt 65 11 63

TOTAL 161 100

Evidence from most of entrepreneurial literature suggests that self-

employment becomes an increasingly attractive option as one nears middle

ages As can be seen in table 3 respondent‟s ages ranged from 25 to 65 and

the largest proportion (329) of the participants was in the age range of 36ndash

45 Additionally participants were biased towards the age ranges of between

36 and 65 and away from the under 25 and over 65

TABLE 4 GENDER PROFILE AS PER PARTICIPANT

GENDER

Male 116 720

Female 45 280

TOTAL 161 100

53

In relation to gender the research sample was predominantly male (72) a

striking although unsurprising demographic characteristic that reflects the

composition of the larger business sector in the country as a whole

Consequently only (28) were females This is clearly illustrated in table 4

above

TABLE 5 EDUCATION PROFILE AS PER PARTICIPANT

EDUCATIONAL LEVEL

Primary 8 50

Junior-level 29 180

O-level 78 484

Diploma 34 211

Higher Degrees 12 75

TOTAL 161 100

As evident from table 5 the educational levels attained by respondents varied

considerably as follows Primary School Certificate (8 or 5) Junior

Certificate (29 or 180) Ordinary Level (78 or 484) Diploma (34 or

211) and higher Degrees (12 or 75 ) On the whole though the data

suggest that the educational levels of our respondents are low the largest

proportion (398) possessing an Ordinary Level certificate

54

TABLE 6 YEARS EMPLOYED AS CEO AS PER PARTICIPANT

Years Of Employed as CEO

0-3 44 273

4-7 88 546

8-14 15 94

15-19 11 68

Over 20years 3 19

TOTAL 161 100

Not surprisingly table 6 shows that most of the responding executives did not

have education that emphasized a business curriculum This can be

understood with respect to the Mauritian educational curriculum which largely

overlooked business subjects until very recently

The research sample participants had been employed at their current firms on

average 1467 years and had an average of 12 years experience in the

manufacturing industry Four predominant job titles used by the senior

executives emerged from the questionnaireinterview responses Managing

Director (38) Director (26) Manager (20) and Chief Executive Officer

(16)

55

43 CHARACTERISTICS OF RESPONDING FIRMS

This section presents the descriptive statistics of the responding firms The

description focuses on age of the firm employment size firm revenues and

firm ownership

TABLE 7 COMPANY AGE PROFILE

Age of Company Frequency Percentage

1- 3 years 44 314

4- 6 years 68 486

7-10 years 19 136

11-15 years 7 50

Above 15 years 2 14

TOTAL 140 100

Table 7 displays the statistical data Of the firms responding the largest

proportion (486) was 4 to 6 years old Overall the sample reveals a skewed

distribution towards the ranges between 4 and 15 Also it is interesting to note

that 915 of the responding firms are mature that is beyond the start-up

phase

TABLE 8 EMPLOYEE PROFILE AS PER PARTICIPANT

Number of Employees

50-99 101 721

100-200 39 279

TOTAL 140 100

56

Unsurprisingly the vast majority of the responding businesses had fewer than

100 employees as depicted n table 8 with the largest proportion (701) in

the 50ndash99 employee categories The study found out that most small

companies would opt to have family and relatives as employees to minimise

costs Only 32 average of the firms were medium-size The preponderance

of small firms in the sample mirrors a more general pattern of firm distribution

in the country where medium and large firms are a conspicuous small

minority

TABLE 9 ANNUAL SALES AS PER COMPANY

Annual Sales

Less than R100 000 88 629

R101 000- R250 000 36 257

R251 000- R15 million 11 79

Above 15 million 5 35

Total 140 1000

As shown in table 9 the largest proportion of responding firms 88or 629

achieved a turnover below R10000000Only scant 11 or 79 posted annual

revenue in excess of R15 million

57

TABLE 10 OWNERSHIP AS PER PARTICIPANT

Ownership

Wholly Citizen 76 550

Joint Venture 42 293

Foreign Owned 22 157

TOTAL 140 100

Regarding ownership table 10 shows that an overwhelming majority or 550

of firms were wholly citizen-owned while the remaining 293and 157

were joint venture with citizen stake and foreign-owned respectively

44 Language

From most of the participants investors do not have to learn Local Mauritius

language since English and French are the official languages in the country

Since most of the investors to Mauritius are either English or French speaking

language as such is not a barrier to business practices and success for

prospective investors

ldquohellipwell it is not very important for foreign investors to learn languages

spoken in Mauritius because we can speak both English and Frenchrdquo

[Participant A5]

ldquohellipactually language is not barrier to English or French speaking investorsrdquo

[Participant A21]

58

Language is perhaps the most complex and perplexing aspect of the

Mauritian social mosaic (Rassool 1996) Contrary to the results that show that

language is not a problem for investors since most of the investors who come

to Mauritius are English or French speakers who normally fits well in the

society since these are the two official languages

This intricacy derives from the number of languages spoken combined with

the uses to which they are put and the socio-political connotations they bear

Baker and Stein (1977) scholars studying language use in Mauritius have

found that English is associated with knowledge French with culture

Creole with egalitarianism and other languages ancestral heritage

Consequently although Creole is the most widely spoken language in the

country French predominates in the media and English is the official

language of government and school instruction (Stein and Baker 1977)

According to the 1983 census the top five languages were Creole 541

Bhojpuri 204 Hindi 115 percen French 37 and Tamil 37 These

figures indicate the principal language used in the home Most Mauritians

however speak several languages

Literature suggests that global organizational structures need to adopt

common rules and procedures in order to have a common bdquolanguage‟ for

communicating across cultural borders (Kostova 1999 Kostova and Roth

2003 Gupta and Govindarajan 2000) This is directly reflected by the results

above that foreign investors need not to learn the local language of locals but

its important to create a common language within the organisation that is

59

understood by all stakeholders in the organisation for effective and efficient

communication

45 Religion

The study found that main religions in Mauritius are Hindu Muslim and

Christianity to a lesser extent Hindus make up approximately half of

religiously affiliated Mauritians Of the remaining Mauritians approximately a

third are Christians and about 15 Muslim followed by small Buddhist and

Sikh communities It is therefore imperative that a foreign investor considers

religion of the people of Mauritius before setting up a business Religion

The study also found out that various religions found on Mauritius tend to play

a major part in the islands cultural events and churches temples and

mosques are to be found everywhere Hindu and Tamil celebrations are part

of Mauritian cultural life

ldquohellipFestivals such as Divali (the festival of lights) Holi (in which participants

are covered in colourful powders) and Thai Poosam in which Tamil devotees

pierce their bodies with masses of needles as an act of penance are

popularly attended by Mauritianshelliprdquo [Participant A60]

ldquohelliphellipthere are also a number of diverse practices and superstitions

originating in beliefs brought from Africa and Asia Local sorcerers known as

longanistes or traiteurs are sometimes called in to settle arguments exact

revenge or administer love potionshelliphelliprdquo [Participant B41]

60

However all communities live together in harmony with each other regardless

of religion the study learnt

hellipHarmonious separatism is how we characterise our communal relations

in Mauritiushellip [Participant A13]

Since all citizens are ldquodescendants of slavery there are no tribes unlike

other African countries This has made integration and assimilation easier and

it makes it very easy for any SME to adapt to the local conditions due to pre

existing harmonyrdquohellip [Participant A13]

It is worth noting that businesses remain closed in public religious days but

the purchasing power remains the same regardless of whether it‟s a public

holiday or not

ldquohellipthe demand is not dependent on whether itrsquos a holiday or nothelliprdquo

[Participant A11]

ldquohellipit doesnrsquot matter really whether its holiday or religious holidayhelliprdquo

[Participant A21]

According to Stein and Baker (1977) the Mauritian society is noteworthy for

its high degree of religious tolerance Mauritians often share in the

observances of religious groups other than their own In part as a result of the

multiplicity of religions Mauritius has more than twenty national holidays In

addition the government grants subsidies to all major religious groups

61

according to their membership (Stein and Baker 1977)This is also evident

from the results of the research

Ethnicity religion and language have been important factors in shaping the

way Mauritians relate to each other in the political and social spheres Despite

the fact that sectarian factors are less of a determining factor in peoples

social and political behaviour they remain an important clue to the peoples

past and self-identity (Rassool 2001) As a foreign investor understanding

the religious belies of a society and taking all the necessary details in to

consideration play a major role in an international business environment

setting (Hosftede 1980) For example observing religious holiday and making

sure employees get days off and annual leaves on such important days

having prayer rooms for those willing to pray at work and creating a non-

discriminatory environment for all employees

It is worth mentioning that while religion does not have a direct impact on

Mauritius investment since it an international business hub However it is

important for investors to take note of all the aspects of religion since it plays a

very important role in lives of the Mauritians For example there are religious

holidays as an employer it is important to follow the religious holiday calendar

and give annual leaves to employees on such important days

46 Social Life

For the interest of prospective investors the study found that the social life in

Mauritius is very much close to families and friends People all meet at open

markets for normal shopping and socialise over weekends ldquoeven ministers

62

managing directors of big companies go to open marketsrdquo [Participant

A12]

There is no busy night life in the country as well as cinema and theatres

because most people prefer home video entertainment ldquoMost people found at

social places like cinemas pubs clubs etc are employees and not

employersrdquohelliphellip [Participant A12] Prospective investors should therefore

know that they are likely to meet business associates at board rooms or at

their offices rather than at social centres

In a society where tolerance is a national virtue and ethnic conflicts are

invisible to the casual visitor it takes time to learn the dos and donts of

socialising ldquohelliphere in Mauritius you must realize that we walk on eggs

continuouslyhelliprdquo [Participant B36] For a peaceful and tolerant as Mauritius

undoubtedly is the diverse groups populating the island do not collectively

make up a nation Mauritius like any other island is a nation of nations and

compromise is the order of the day be it in politics in the economy in the

media or at a dinner party the study found

The study found out that unlike other African societies Mauritius people would

prefer to stay at home and watch movies play video games with kids or visit

friends and relatives to socialise or for a night out There are not many social

night clubs in Mauritius as compared to the United Kingdom ldquohellipmany homes

today have a Digital Video Decoders (DVD) sets and donrsquot see the importance

of going out to cinemas and would helliphelliphelliprdquo [Participant A12]

63

This does not come as a surprise since literature suggests that Mauritius

though it is multicultural society and an international hub for business there

are a quiet peaceful and tolerant nation and would prefer to keep their space

(Stein and Baker 1977)

47 Market Accessibility

The study found that as first foreign investor Mauritius government has open

market programme When the free operational zone initiative began investors

imported raw materials imported duty free and foreign companies had to

show transformation of raw materials into fished exports since the

government‟s aim was to increase exports thus improve balance of trade

However in the early stages the initiative did not work as expected because

of certain barriers

Lack of adequate government incentives to lure more investors

Too much repetition meaning most of the companies where doing the

same thing

Lack of skilled human resources

The scenario is summarised by participant B3 in the following

statementldquohelliphellipour people did not have culture of businessrdquo

For more access to the markets further initiatives were put into place The

government assured investors of freedom of capital movement that is the

investors were guaranteed that they would bring their money into and out of

the country whenever they felt like doing so In addition the government

64

embarked on providing more facilities (industrial buildings) and infrastructures

all over the country opening up rural areas because towns already had

infrastructures Lastly first time investors were provided with free access to

customs thus maintaining the earlier option of tax free imports

While Mauritius was doing all these events elsewhere in the world played to

their favour European Union and USA were imposing import quotas on

Chinese and Indian imports to prevent damping So these investors had to

look for alternative markets and Mauritius turned out to be one of such

markets But the government had to act quickly to avoid bdquotransit investors‟

ldquohellipthey are investors who want to do business when it favours them but when

they begin to loose certain privileges or profits get diminished then they take

offrdquohelliphellip [Participant B3]

To avoid this foreign investors were made to transfer skills and knowledge to

local community which led to emergence of Mauritius community of

manufacturing

ldquowho started from easy stitching like socks pyjamas bras etc and later

upgraded to big Mauritius labelshelliprdquo [Participant B3]

The study further found that the initiative did not stop there The government

further established Mauritius Enterprise Development Investment Authority

(MEDIA) in 1985 which took lead in looking for prospective investors from

65

Europe USA Hong Kong and India among others Any willing investor was

transported to Mauritius and accommodated freely on government accounts to

tour the country and carry out investment feasibility studies This helped to

popularise the investment opportunities in Mauritius and attracted many more

investors Currently MEDIA has been transformed into Mauritius Board of

Investment which is no longer in charge of managing industries but

ldquopromotes Mauritius businesses abroad and participates in trade fairs to

further open uprdquo [participant B3]

The study also found out that there are specific niche markets for foreign

investment in Mauritius namely the Offshore Industry the Financial Industry

the Construction and Tourism especially in the area of high class luxury

property market in form of villas hotels and apartments and of recent the

Information Technology (IT) industry These industries cover a large spectrum

including SMEs

ldquohellipone of these sectors makes a very good investment for any investor

especially the construction industryhelliprdquo [Participant A89]

The results agree with Putz (2000) which notes that niche markets make

establishing a business by immigrants easier because the immigrants needs

for consumer goods create a specific demand This is evidence by all the

incentive the Mauritian government have put in order to attract foreign

investors in to country for the benefit of the Mauritian population Furthermore

Putz (2000) emphasise the opportunities offered by the host country including

66

access to the market and job market conditions as important factors for

international business

48 The role of ICT to SME business in Mauritius

The study found that Mauritius has a very well established ICT sector It has

formed the backbone of SME success in Mauritius As early as 1990 the

country provided hellip ldquothe fastest broadband in the world to help SME business

investors who were each allocated free 2MB internet accessrdquohellip[Participant

A 23] Recently the government has in turn invested a lot of money in

developing a cyber city a few kilometres away from the capital Port Louis

which will form the hub for future investments

This high level of ICT development in the country has created SME in areas

such as offshore financial services calls centres and enhanced tourism

industry growth Any prospective investors are guaranteed of highly

developed ICT backed up by highly qualified local human resources The

offshore investment sector has even been further boosted byhellipldquobilateral

agreements with India allowing companies registered in Mauritius to transfer

funds to India tax freerdquohellip[participant B13]

It is hoped that in helliprdquo5 years time the whole island will have free wifi

connectivityrdquo participant B33 The country not only makes use of its advanced

ICT sector but has become a big player in the region as well For example

Mauritius state informatics computerised South African government in 1996 It

has also won other computerisation contracts in Zambia Zimbabwe Namibia

Kenya and Ghana To sustain such success ldquopartnerships have been formed

67

with global players such as Microsoft to provide training not just to Mauritius

nationals but other scholars from the South Eastern Africa region as

wellrdquohellip[participant B13]As matter of fact the government of Mauritius has

invested billions in building s cyber-city a few miles aware from the capital

Port Louis

ldquoits opening in July this year and it is expected to be the centre of attraction

for investorsrdquo [Participant B13]

ldquoactually the government invested in this cyber-city with the intention to

attract European and American investorsrdquo [Participant A6]

From these results there is evidence that technology plays a major role in

SME development Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

68

48 Governance and the role of women in SME sector

in Mauritius

Mauritius is a multicultural country with ldquo70 of the population of Chinese

Indian ancestry 2 white French origin and the remaining mixed race ndash

creolesrdquo [participant A17] Europe has not have a lot if cultural influence on the

country and predominant cultures are Asian African cultures Study found

that common folklore popular songs in Mauritius would also be ordinary

found on other African countries such as Senegal Mozambique Cameroon

and Sierra Leone among others signifying deep rooted African traditions

The government maintains ndash discrimination laws for either gender In the early

stages of SME development women provided the bulk of the labour in the

rural areas as industries moved away from cities into the rural areas There

are concerted efforts to get women into jobs especially leadership roles

ldquowomen themselves are too slow to act and take advantage of the

government incentivesrdquo

The study found out that woman in Mauritius do not occupy positions of

strategic power decision making This is not a surprise because it is the same

with most Southern African countries The government of Mauritius has put a

lot of structures to support women in business but women are taking it slow to

utilize these structures

69

There are many government agencies and organizations headed by women

and even cabinet posts but most women would rather stay out of politics

becausehelliphellipldquopolitics can get very dirty involving personal lives of politicians

which men donrsquot mind but women do mind a lot aboutrdquohellip[participant A 17)

However in other sectors like education and healthcare there are many

women represented in the labour force

The study also found out that just like any other society one can not ldquohellipstop

some kind of abuse for both males and females There are cases of both

female and male harassment but the law comes in to protect such victims

There are also cases of petty crime and rape involving women either as

perpetrators or victimsrdquohellip [Participant A13]

According to AllAfrica Global Media (2008) the winds of change are blowing

across the island of Mauritius and many men in this traditionally conservative

nation are working hand in hand with women to see that the common sense of

gender equality prevails The absence of women at the decision-making table

usually means the absence of their priorities and needs Irrespective of the

Southern African Develoment Community (SADC) Declaration there are so

few women in politics This is evident from the results of the study which found

that women will rather do health jobs and education than to play the dirty

tricks of politics

Women councillors make up a mere 37 in the Moka-Flacq District Council

This is the lowest figure not only in Mauritius but also in the SADC region

70

This is far from the 2005 30 target not to mention the 50 goal now being

set for the region and included the draft Protocol on Gender and Development

up for review at the August SADC Heads of State Summit ( AllAfrica Global

Media 2008)The results found out that there is also a few representations of

women in business Women do mostly the dirty jobs of caring for children and

their families and do not have the courage to enter the business sector This is

not surprising especially in the SADC region women play the minority role

and are rarely represented at the strategic decision making level hence their

needs are always neglected resulting in women poverty

49 Challenges faced by the country and hence SME investors

Stiff competition from other countries such ashelliphellipldquoBotswana Vietnam and

South East Asia in the textile industry due to cheap labour Maldives and the

Caribbean Islands for tourism difficult in Training enough qualified personnel

in ICT to cope with demand International competition and access to fundsrdquo

hellip[participant B13]

To face these challenges the study found that the country has expanded

tertiary education and formed partnerships with foreign universities such as

ldquoFrench Scientific University which has been running Medical school in

Mauritius for 10 years By the time of this study an agreement had been

reached by Thames valley university (UK) to open up campus in

Mauritiusrdquohellip[participant B15] The aim of the government is to offer high

quality education to students from the region as well as far away like China at

affordable cost and to compete with European universities Further to

71

educational development the study also found out that the country is striving

to create partnerships with ldquoresearch organisations and to create high quality

healthcare so as to benefit from health tourism where would just travel to the

country to get affordable high quality specialised health carerdquohelliphellip [Participant

A3]

Finally results show that there is stiff competition from different sectors of

business and other force which needs to be taken into consideration when

doing business internationally Globalization tends to redistribute economic

rewards in a non-uniform manner a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) It essential to know all

the factors surrounding the business sector and understanding all the

business practices before investing to avoid any loss

72

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

Research on culture and IB is definitely a bdquogrowth‟ area because the business

world is in many ways becoming one The researcher concluded the following

based on study findings

Firstly the cultural diversity and harmony of the island make Mauritius a

unique place in the world It is also known for its social peace political stability

and racial harmony Its steady economic growth over the years coupled with

its nation‟s social cohesion and prosperity ensure continuing development

Secondly Mauritius enjoys a literacy rate over 80 percent Skilled labour

graduates and qualified professional including lawyers engineers IT

programmers consultants accountants and chartered secretaries are

available to suit virtually all business needs in two international languages

English and French Language is therefore not a barrier to foreign investment

In addition academic training at the University of Mauritius and the newly

established University of Technology a comprehensive system of vocational

training through the Industrial and Vocational Training Board (IVTB) ensures a

ready supply of skills in a number of fields such as tourism engineering

electronics jewellery ICT printing and textiles

Thirdly In view of the importance of foreign investment as a source of

sustenance to economic growth the government of Mauritius has taken a

series of policy measures to encourage its flows into manufacturing offshore

73

banking and financial services information technology communication and

tourism As far as foreign investors are concerned Mauritius offers itself as an

attractive destination because several positive features such as political

stability availability of skilled labour and investment-friendly rules and

institutions

Fourthly after a sustained growth path over the last three decades based on

sugar textiles and tourism Mauritius is now shifting gears to move towards a

higher stage of economic development so as to consolidate its position as a

premier international hub Foreign Direct Investment (FDI) has played an

important role in the development of Mauritius and will again be decisive when

the country embarks on high value-added capital intensive and knowledge-

based activities

Fifthly the government plays the role of a facilitator and has endeavoured at

all times to create the most conducive investment environment by enacting

appropriate legislations building state-of-the-art infrastructure investing in

human capital and introducing packages of investment incentives for the

manufacturing financial services and ICT sectors so as to enhance the image

of Mauritius

In this respect the Board of Investment (BOI) is the first contact point for

anyone investing in Mauritius Operating under the aegis of the Ministry of

Finance the BOI was established in March 2001 under the Investment

74

Promotion Act to give a new impetus to foreign direct investment The BOI is

the apex organization for the promotion and facilitation of investment in

Mauritius The primary role of BOI is to stimulate the development expansion

and growth of the economy by promoting Mauritius as a competing business

and service centre It aims at streamlining the legal framework and to make

better provision for the promotion and facilitation of investments in Mauritius It

acts as a facilitator and provides a one-stop shop service to both local and

foreign investors ensuring reliable and speedy processing of applications The

BOI receives processes and approves all applications for investing in

Mauritius It also assists investors in obtaining the necessary secondary

permits and clearances from relevant authorities thus ensuring a speedy

implementation project

Six Mauritius pursues a liberal investment policy and actively encourages

foreign direct investment in all sectors of the economy Attractive packages of

both fiscal and non-fiscal incentives tailor-made to the needs of each priority

area of development are offered to investors Excellent opportunities for

investment in Mauritius exist in various sectors of the economy including

manufacturing information technology knowledge industry regional

headquarters tourism and leisure financial services Freeport activities

amongst other sectors Some of the priority areas are in Information and

Communication Technology which is set to a play a lead role in the economic

development of the country in the medium and long terms The availability of

high bandwidth connectivity (with SAFE Project and international Gateways)

at near global parity in quality and tariff on the one hand and the setting up of

75

dedicated IT habitats including the Cyber city at Ebeacutene on the other hand

plus total Government support to this industry are testimony of the importance

of this industry to Mauritius Others include the manufacturing sector textiles

and apparel the spinning sector electronics and light engineering medicals

and pharmaceuticals agro-business leather products and jewellery and

watches

The export-oriented manufacturing sector has been the backbone of the

Mauritian economy for the past three decades This sector remains a major

constituent of the Mauritian economy in terms of foreign exchange earnings

employment and contribution to GDP and is called upon to continue to play

an important role in the consolidation and diversification of the industrial base

of the country certain

Lastly some incentives provided by government to foreign investors In the

manufacturing sector these include among others

No customs or duty or sales tax on raw materials and equipment

No tax on dividends

No capital gains tax

Free repatriation of profits dividends and capital

50 relief on personal income tax for expatriate staff

New incentives for the ICT Sector consist inter alia of

the availability of tax holiday up to year 2008 for specified

pioneering high-skills ICT operators typically geared towards the

export market such as software development multi-media and to

high-level ICT training institutions

76

customs duty-free import of ICT and similar equipment

50 relief of personal income tax for a specified number of foreign IT

staff

duty-free import of personal belongings of foreign IT staff

effective fast track procedure for procession of visa and work

permits for foreign staff including spouses

From the above the research concludes that Mauritius being a multicultural

society as it is the culture they share does not have a direct impact on

investment in Mauritius because of it is an international hub for business It is

also expected that from the results the situation is not going to change after

time but will keep in this shape for a long since it is the government incentive

to attract more investors into the country However there are certain aspect of

culture eg believes that foreign investors need to understand and take into

consideration This study recommends any prospective investor to make good

investment in to Mauritius without fear

77

CHAPTER SIX

REFLECTIONS FROM THE STUDY

The views derived from this study might not be directly applicable to the whole

region because of variations in socioeconomic settings in various parts of the

Mauritius Also views expressed in this study were obtained mainly from

urban based managers and respondents and might not be similar to rural

based SMEs from the same community or area

Some scholars might not support the sampling techniques used but they

were the most practicable given the circumstances

Legal practitioners in Mauritius were supposed to be part of the sample but

they were hard to reach with some declining to participate

Demographically and geographically the sites were larger than anticipated

given the time and resources available for the study

Lastly the study was limited to the previous 20 years which might have

yielded same generational trend missing the opportunity to get data across

various generations within the sites

78

CHAPTER SEVEN

FUTURE RESEARCH

With more funding and resources a similar study could be conducted

throughout a wider geographic region and encompassing all categories of

SMEs micro small and medium Furthermore with more time a greater

number of interviews could be conducted which would provide richer data that

would be more in depth for conclusive analyses to be made Additionally

participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

79

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

WORD COUNT 16 969

80

APPENDICES APPENDIX 1 MauritiusData Profile

2000 2005 2006

World view

Population total (millions) 119 124 125

Population growth (annual ) 10 08 08

Surface area (sq km) (thousands) 20 20 20

Poverty headcount ratio at national poverty line ( of population)

GNI Atlas method (current US$) (billions) 444 653 681

GNI per capita Atlas method (current US$) 3740 5250 5430

GNI PPP (current international $) (billions) 891 1239 1334

GNI per capita PPP (current international $) 7510 9970 10640

People

Income share held by lowest 20

Life expectancy at birth total (years) 72 73 73

Fertility rate total (births per woman) 20 20 20

Adolescent fertility rate (births per 1000 women ages 15-19) 39 40 41

Contraceptive prevalence ( of women ages 15-49)

Births attended by skilled health staff ( of total) 100 99

Mortality rate under-5 (per 1000) 18 15 14

Malnutrition prevalence weight for age ( of children under 5)

Immunization measles ( of children ages 12-23 months) 84 98 99

Primary completion rate total ( of relevant age group) 105 97 92

Ratio of girls to boys in primary and secondary education () 98 100 103

Prevalence of HIV total ( of population ages 15-49) 06

Environment

Forest area (sq km) (thousands) 04 04

Agricultural land ( of land area) 557 557

Annual freshwater withdrawals total ( of internal resources)

Improved water source ( of population with access) 100

Improved sanitation facilities urban ( of urban population with access) 95

Energy use (kg of oil equivalent per capita)

CO2 emissions (metric tons per capita) 23

Electric power consumption (kWh per capita)

Economy

GDP (current US$) (billions) 447 629 635

GDP growth (annual ) 40 46 35

Inflation GDP deflator (annual ) 37 48 41

Agriculture value added ( of GDP) 6 6 6

Industry value added ( of GDP) 31 28 27

Services etc value added ( of GDP) 63 66 68

Exports of goods and services ( of GDP) 63 57 60

Imports of goods and services ( of GDP) 65 61 67

Gross capital formation ( of GDP) 26 23 25

Revenue excluding grants ( of GDP) 220 214 215

Cash surplusdeficit ( of GDP) -11 -21 -30

States and markets

Time required to start a business (days) 46 46

Market capitalization of listed companies ( of GDP) 298 416 567

Military expenditure ( of GDP) 02 02

Fixed line and mobile phone subscribers (per 100 people) 39 82 90

Internet users (per 100 people) 73 241 145

Roads paved ( of total roads) 97

High-technology exports ( of manufactured exports) 1 2 24

Global links

Merchandise trade ( of GDP) 82 84 91

Net barter terms of trade (2000 = 100) 100 109 115

External debt total (DOD current US$) (millions) 1713 2153 1997

Short-term debt outstanding (DOD current US$) (millions) 767 1363 1363

Total debt service ( of exports of goods services and income) 181 72 71

Foreign direct investment net inflows (BoP current US$) (millions) 266 39 107

Workers remittances and compensation of employees received (US$) (millions)

177 215 215

Official development assistance and official aid (current US$) (millions) 20 34 19

Source World Development Indicators database April 2008

81

APPENDIX 2

SUMMARY GENDER PROFILE (Mauritius)

Mauritius

Sub-Saharan Africa

Upper middle income

1980 1990 2000 2004 1980 2004 1980 2004

GNP per capita (US$) 1210 2300 3690 4640 652 601 2391 4769

Population

Total (millions) 10 11 12 12 3850 7258 4394 5762

Female ( of total) 507 501 502 503 503 501 515 514

Life expectancy at birth (years)

Male 63 66 68 69 47 46 63 66

Female 69 73 75 76 50 47 71 73

Adult literacy rate ( of people aged 15+)

Male 848 884 954

Female 750 805 942

LABOR FORCE PARTICIPATION

Total labor force (millions) 0 0 1 1 157 299 193 256

Labor force female ( of total labor force)

37 34 34 35 43 42 42 41

Unemployment

Total ( of total labor force)

33 88 102 12

Female ( of female labor force)

36 96 126 134

EDUCATION ACCESS AND ATTAINMENT

Net primary school enrollment rate

Male 91 96 94 68

Female 92 97 96 60

Progression to grade 5 ( of cohort)

Male 97 99

Female 98 99

Primary completion rates ( of relevant age group)

Male 61 105 98 66 95

Female 63 104 102 56 96

Youth literacy Rate ( of people aged 15-24)

Male 912 937 978

Female 911 954 974

HEALTH

Total fertility rate (births per woman)

27 23 20 20 67 53 31 20

Contraceptive prevalence ( of women aged 15-49)

75 26 76 22 69

95

82

APPENDIX 3

DATA COLLECTION FORM FOR THE SURVEY Sitehelliphelliphelliphelliphellip Participant numberhelliphelliphelliphellip MANAGING DIRECTOR CEO MANAGER

Age group -25 26 ndash 35 36 - 45 46-55 56-64 65+

Education Nursery ndash Standard 4

Std 5 ndash 7 (8) Form 1 ndash 2

Form 3 ndash 4 or A level

College University

Employment Yes No Business (what type)

Partnership Whole Citizen

Joint Venture

Age of Company

1-3 years 4-6 years 7-10 years

11-15 Above 15yrs

Number of Employees

10-25 50-99 100-149 150-200

Place of birth

In the constituency

Outside the constituency

Where

Residence Rural Urban Where

Before starting business

After business

Children

Boys Number

Girls Number

Any born a Yes None

Are they in school

Yes No Some

Working Yes No Some

Annual Sales

Balance Sheet

Less than R1000000

R101 000- 250 000

R251 000- 15 million

R 15 million +

Years Employed as CEO

0-3 4-7 8-14 15-19 Over 20 years

83

APPENDIX 4 Qualitative data questionnaire The following questions were used as a guide during the focus group discussions However they were not followed in the strict order or wording as they appear here

SOCIAL INCLUSION EXCLUSION

I am going to ask you questions regarding support you think the society could give foreign investors There is no right or wrong answers it is just about your opinion

a) How do you feel about foreign investors coming to Mauritius

b) How has your friendship with foreign business before and after they arrive in Mauritius

c) Do you keep in touch with foreign businesses around you and prospective investors

d) In your opinion how does foreign business feel about Mauritius

e) Are foreign businesses doing well or badly

f) What support structures or government incentives are there for foreign investors

g) What kind of support would you like to receive from the government

BUSINESS ATTITUDE AND BELIEFS

I am now going to ask you some general questions about business and your opinions about it

a) How would you describe the general business environment

b) Do you find it difficult to do business with people from different countries of the world Why

c) What do you believe the first thing to do on the morning before opening

your business (Local people) Why

d) How best can the Mauritius people be motivated into business How do you get over them

84

e) What areas do local people consider as niche areas for foreign

business

f) How do local people organize their business Why

g) As a local business person what would you consider as abomination of business in Mauritius Why

h) What is the role of women in the business sector

CULTURE

I am now going to ask you questions about the your culture

a) What are your views about business culture in Port Louis

b) What are the challenges of national culture on business practices in your opinion

c) What are the benefits of culture on business practice

d) Do you think foreign investors need to know the local language when investing in Mauritius

e) If you were to advice a foreign investor what would you want them to know about Mauritius

f) How do you think the family daily practice influences business in

Mauritius

g) What business actions of behaviors are sensitive to the local people

h) How best can foreign investors assimilate with the local business people

i) What do local people like to buy on weekends week days public religious holidays

j) What marketing strategies violet the culture of Mauritius ndashwomen naked Eating behavior Etc

85

APPENDIX 5

Introductory letter consent form

TITLE CULTURE AND INTERNATIONAL BUSINESS

ENTREPRENUERSHIP A CASE STUDY OF MAURITIUS

INTRODUCTION

I am Angelinah Boniface a student pursuing Masters of Science in

Information Systems the University of Sheffield United Kingdom I am

conducting a study on the Impact of culture on small and medium

enterprises for my dissertation The study is expected to last 3 months and a

report of the findings will be availed to all interested stakeholders including the

university as part of course requirements

PURPOSE OF THE STUDY

This study is intended to gain insight into views and opinions about

widowhood and inheritance in relation to health and well being of participants

and the community at large Evidence from this study may be useful in future

government and development agencies‟ planning and provision of relevant

interventions for the benefit of the whole community

VOLUNTARINESS AND CONFIDENTIALITY

Your participation in this study is purely voluntary and you can withdraw

at any time should you feel uncomfortable to proceed Information obtained

from this study will be used for no any other purpose other than the

dissertation It will be kept confidential only accessible to the researcher and

pseudonyms will be used to ensure anonymity and confidentiality of

participants and location The researcher will strive to treat all participants

with dignity respect equality and minimise possible harm that might arise

from the study

Agreeing to take part in this study will be treated as your consent to be

involved in this research BUT YOU HAVE THE RIGHT TO WITHDRAW

THE CONSENT

86

RISKS AND BENEFITS

There are no risks to the questions that will be asked If at any point you feel

uncomfortable to answer any question please feel free to ignore such to avoid

any harm

There is likely to be no immediate benefits to you as a participant However

the information obtained in this study will go a long way in informing the

younger generation and wider audience about the culture It might also be

used by the government and other development agencies to plan for

interventions relevant to the needs of widows in your community in the future

based on the evidence you have provided in this study

CONTACTS

The researcher can be contacted at +44 0791263163 lip07acbshefacuk

or linabonyahoocom in case of any questions issues

In case of any problems that need university attention my supervisor can be

contacted at kalbrightshefacuk

PLEASE DONrsquoT TAKE PART IN THIS STUDY IF YOU ARE BELOW 18

YEARS OF AGE

Thank you very much for your anticipated cooperation

Researcher‟s signature Participant‟s signature

helliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

87

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Bowling A (ed) (2002) Research methods in health Investigating health and

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Dabee R and Greenway D (2001)The Mauritian Economy A Reader

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Dawson C D (2002) Practical research methods A user friendly guide to

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Denscombe M (ed) (2007) The good research guide for small scale social

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Denscombe M(ed) (2003) The good research guide For small scale social

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Gilbert N (ed) (2001) Researching social life London Sage Publishers

Grbich C (1999) Qualitative research in health An introduction London

Sage publications

Hunter D amp Lang T (1993) The Leeds declaration Leeds Nuffield Institute

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Neuman L W(ed) (2000) Social research methods qualitative and

quantitative approaches Needham Heights MA Allyn amp Bacon

Maynard M amp Purvis J (1994) Researching womens lives from a feminist

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Muuka GN (2002) Africas informal sector matters a challenge to scholars

to close the knowledge gap Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

Business and Development International Conference Port Elizabeth April 3-

6 pp1-6

Southwood R (2004)The impact of ICT on SMEs ndash a motor for future

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Machacha L (2002) Impact of information technology on small and medium

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Organisation for Economic Co-operation and Development (OECD)

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Commonwealth Secretariat UK (2006) Looking Outward A study of small

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Reed DM (1998) Using the Business Excellence Model in Small Service

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Taylor AW amp Adair RG (1994) ldquoEvolution of Quality awards and self

assessment practices in Europe a case for considering organisation sizerdquo

Total quality Management 5 (4) 227-237

United Nations (1993) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

Johanson J amp Wiedersheim-Paul F (1995) The Internationalization of the

Firm - Four Swedish Cases Journal of Management Studies 20 (3) 123-139

90

Chui ACW Lloyd AE and Kwok CCY (2002) The determination of

capital structure is national culture a missing piece to the puzzlerdquo Journal of

International Business Studies 33(1) 99ndash127

Earley PC amp Gibson CB (2002) Multinational Teams A New Perspective

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Gibson CB (1999) ldquoDo they do what they believe they can Group-efficacy

beliefs and group performance across tasks and culturesrdquo Academy of

Management Journal 42(2) 138ndash152

Hofstede G (1980) Cultures Consequences International Differences in

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SMIDO (2006)A new Vision For SMEs Development Mauritius

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Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Stone A (1997) SMEs and Technology why should we make special efforts

to help World Bank

Bhagat RS et al (2003) Knowledge in Cross-Cultural Management in Era

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Cairncross F (2001) The Death of Distance Harvard Business School Press

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Commonwealth Secretariat UK (2005) Looking Outward A study of small

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Drucker PF (1995) Managing in a Time of Great Change Truman Talley

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Guilleacuten M (2001) ldquoIs globalization civilizing destructive or feeble A critique

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Gibson CB and Cohen SG (2003) Virtual Teams that Work Creating

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Grazol P et al(2004) ldquoThe Effect of Culture on IT Diffusion Email and Fax in

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Greider W (1997) One World Ready or Not Crown Business New York

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Gertler MS (1997) The Invention of Regional Culture In Lee R and Willis J

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Govindarajan V and Gupta AK (2001) The Quest for Global Dominance

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Haire M et al(1966)Managerial Thinking An International Study Wiley

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Heuer M et al(1999) Cultural stability or change among managers in

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Hofstede G (1997) Cultures and Organizations Software of the Mind New

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Hofstede GH (2001) Cultures Consequences Comparing Values

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Hoecklin L (1995)Embedded Autonomy States and Industrial

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IBP USA (2002) Mauritius Investment and Business Guide IB Tauris and Co

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Kerr C et al (1960) Industrialism and Industrial Man Harvard University

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Kirkman BL amp Shapiro DL (2000) ldquoUnderstanding why team members

won‟t share an examination of factors related to employee receptivity to team-

based rewardsrdquo Small Group Research 31(2) 175ndash209

Lisenda L (2003) Small and medium-scale enterprises in Botswana their

characteristics sources of finance and problems BIDPA Gaborone

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Meredith GG (ed) (2004) Small Business Management in Australia

McGraw-Hill Sydney

Mistry PS (1999) ldquoCommentary Mauritius ndash quo vadisrdquo African Affairs 98

(393) 551ndash69

Mullins LJ(ed) (1999) Management and Organizational Behavior 5th ed

London Financial Times Pitman

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Myers MDamp Tan FB (2002) ldquoBeyond Models of National Culture in

Information Systems Researchrdquo Journal of Global Information Management

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Putz R (2000) ldquoCulture and entrepreneurship views from the middle and

lower level managersrdquo Journal of Business Ethics 22 145- 153

Scottish Economic Statistics Scottish ExecutiveONS IDBR (2005)Size

Analysis of Welsh Business SDR 692004Statistical Press Release URN

0440

Straub D et al (2002) rdquoTowards A Theory-Based Measurement of Culture

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Schaeffer RK (2003) Understanding Globalization The Social

Consequences of Political Economic and Environmental Change Rowman amp

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SMIDOA new Vision For SMEs Development(May 1996)

SMME Task Force Report (1998) Small medium and micro-enterprises task

fore force report Government Printer Ministry of Commerce and Industry

Sondergaard M amp Hofstede G (1994) ldquoA study of Reviews Citations and

Replicationsrdquo Organization Studies 15 (3) 447-456

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Schein EH (1992) Organizational Culture and Leadership Jossey-Bass

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Stone A ( 1997) SMEs and Technology why should we make special efforts

to help (World Bank 1997)

Statistical Press Release (2005) URN 0592 Office for National Statistics

Weisinger JYamp Trauth EM (2002) ldquoSituating Culture in the Global

Information Sectorrdquo Information Technology amp People 15 (4) 306-320

United Nations (2005) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

iii

70 FURTHER RESEARCH78 80 APPENDICES80 81 Apendix 180 82 Apendix 281 83 Apendix 382 84 Apendix 483 85 Apendix 586 90 REFERENCES87

iv

DEDICATIONS

To my father Shadreck Boniface who passed on before I could give back all

the good things you did in my life you will always be remembered by me for

the gap you left in my life no one can replace may his soul rest in peace To

my mother in recognition of your worth for all the support you gave A feeling

bears on itself the scars of its birth it recollects as a subjective emotion its

struggle for existence it retains the impress of what might have been but is

not and hope if the fool would persist in his folly he would become wise To

my daughter and to all my family and friends this is for you

THE BOTSWANA FLAG

The Botswana flag was officially adopted on September 30 1966

The colours on the flag correspond to those on the national coat of arms The

blue represents water the white-black-white bands depict the racial harmony

of the people as well as the pluralist nature of the society They are inspired

by the coat of the zebra the national animal

v

This report is dedicated to all those who spend their daily lives trying to cope

with the challenges of HIVAIDS and all those who are affected by this

disease and to the new AIDS free generation

ACKNOWLEDGEMENTS

My sincere gratitude to all whose knowledge skills experience and support

went into this work First are the authors of various literatures whose work

guided this dissertation Overly important too are all those participants who

offered their resources and business experiences which has influenced the

outcome of this paper

To the University of Sheffield thanks for the opportunity to pursue this course

at your institution and the experts you provided to teach various aspects of the

course A lot of thanks to the course leader and my supervisor Dr Kendra

Albright for all the guidance and motivation she provided during the entire

programme Moreover for the opportunity she gave me to pursue this

research Thanks too to the rest of the tutors especially Dr Barry Eaglestone

who refined my research knowledge and skills Special thanks go to my

sponsor The Commonwealth Scholarship for providing funds for me to purse

my programme To my Administrator Dr Fiona Groccut and Sarah Ferdecio

thank you for the fast response you would give whenever I needed your help

A special thank you to Richard Campos the Managing Director for

RCBusiness Support Ltd for the support you throughout this project

I could not do without the invaluable family support from my sister Juliet

Shadreck and my mom Monica Boniface thank you mum Particular thanks

to Theo my daughter who I left at a tender age to come and pursue this

vi

course To Gobonaone Keaosenya thanks for your moral and emotional

support you gave during my studies To my family Lebo Kay Goitse Kgosi

Monica Jullie Douglas and all other friends not mentioned thanks for your

moral support Thanks to my family for their prayers and support

Thanks too to all my MSc in Information Systems classmates for sharing their

extensive and diverse knowledge skills and experiences during the course I

acknowledge friends and colleagues in Botswana who encouraged me to

pursue this programme particularly Dr Jorosi for the inspirational advice

Special thank to my sincere friend Patience Chakandinakira for her moral

supportTo Dr Phil Lyoka thank you for the editing and grammar corrections

and all the support you gave throughout this project

Due to technical limitations I am not able to list everyone but I OWE ALL OF

YOU who provided moral academic technical economic support or

otherwise a very BIG THANK YOU including whoever reads this work

vii

LIST OF ABBREVIATIONS

BIDPA Botswana Institute for Development Policy and Analysis BOI Board of Investment ESRC Economic And Social Research Council EPZ Export Processing Zones FDI Foreign Direct Investment GDP Gross Domestic Product GSP General System of Preferences IB International Business ICT Information Communication Technologies ILO International Labour Organisation IT Information Technology ISO International Organization for Standardization IVTB Industrial and Vocational Training Board MEDIA Mauritius Enterprise Development Investment Authority MNC Multinational Companies NAFTA North American Free Trade Agreement NHPA National Handicraft Promotion Agency OECD Organisation for Economic Co-operation and Development SADC Southern African Development Community SEHDA Small Enterprises amp Handicraft Development Authority SME Small and Medium Enterprise SMME Small medium and micro-enterprises SMIDO Small amp Medium industries Development Organisation UK United Kingdom UN United Nations USA United States of America WTO World Trade Organization

viii

LIST OF ILLUSTRATIONS TABLES Table 1 THE STUDY TIME SCALE

2 RESPONDENTS RATE ACCORDING TO SECTORS

3 AGE GROUP AS PER PARTICPANT

4 GENDER PROFILE

5 EDUCATION PROFILE 6 YEARS EMPLOYED AS CEO 7 COMPANY AGE PROFILE 8 NUMBER OF EMPLOYEES 9 ANNUAL SALES 10 OWNERSHIP

FIGURES 1 MAP OF MAURITIUS SHOWING ALL PROVINCES

2 MAURITIUS MAP SHOWING POLITCAL DIVISIONS

3 THE DYNAMIC OF TOP-DOWN-BOTTOM-UP PROCESS ACROSS LEVELS OF CULTURE

4 PUTZ MODEL FOR IMMIGRANT BUSINESS AND CULTURE

5 THE BASIC MECHANISM OF INTERNATIONALISATION-STATE AND CHANGE ASPECT

ix

ABSTRACT

In this new millennium few executives can afford to turn a blind eye to global

business opportunities The globalizing wind has broadened the mindsets of

executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories One such new

trajectory is the concern with national culture Whereas traditional IB research

has been concerned with economic legal issues and organizational forms and

structures the importance of national culture has become increasingly

important in the last two decades largely as a result of the classic work of

Hofstede (1980) National culture has been shown to impact on major

business activities from capital structure (Chui et al 2002) to group

performance (Gibson 1999)

The purpose of this study was to understand the concept on how to penetrate

a new international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

Data was collected through telephone interview web survey literature review

and face to face interview involving business managers legal stakeholders

and government officials and former government ministers About 17

telephone interviews were done with only government officials 4 face to face

interviews and 140 web survey interviews questions All the respondents were

x

randomly selected and respondents would suggest further participants Data

was put in to categories and themes and analysed according to those themes

Putz (2000) model was used as guide to selection of themes

Findings revealed the following 1 Language and religion are not a barrier to

foreign investment in Mauritius 2 Mauritius is a peaceful and tolerant nation

and most of its social life revolves around family and friends 3 Market

opportunities exits in the manufacturing industry offshore financial services

cyber culture and the construction industry 4 The country‟s business

economy faces stiff competition from Botswana South Africa and Vietnam 5

The government plays an important role in ensuring security for foreign

investors

From the results it was concluded that culture plays an important role in the

daily lives of the Mauritian people but it does not have a direct impact to

investment in Mauritius

1

CHAPTER ONE

INTRODUCTION

Globally Small and Medium Enterprises (SMEs) are increasingly regarded as

vital for diversifying economies through the creation of employment

(Machacha 2002 p 277) The OECD (2000) notes that small and medium-

sized enterprises account for 60-70 percent of jobs created in member

countries Southwood (2004) in discussing the status of the SME sector in

Africa observed that governments and large corporations dominated

economies of the countries yet the real engine of economic growth lay with

SMEs Muuka (2002 p 1) in discussing the SME sector in Africa noted that

the informal sector is huge due to the large numbers of employees it absorbed

as a consequence of inadequate jobs and opportunities in the formal sector

The author points out that in many African countries the informal sector is

estimated to employ from three to six times the number of employees in the

formal sector However very little has been documented through research

about this important sector

In Mauritius the Mauritian government believes that the real engine of

sustainable and equitable growth is in the SME sectors Not only is it of great

importance for the rate of job creation and income generation but also it

deserves particular attention since the sector has been largely neglected in

the past In this respect this study of Mauritius is important in addressing

some of issues of culture by using the International business as a framework

for this study to understand the business environment in Mauritius and the

potential for growth in a global perspective (Stone 1997)

2

In this new millennium few executives can afford to turn a blind eye to global

business opportunities Japanese auto-executives monitor carefully what their

European and Korean competitors are up to in getting a bigger slice of the

Chinese auto-market Executives of Hollywood movie studios need to weigh

the appeal of an expensive movie in Europe and Asia as much as in the US

before a firm commitment The globalizing wind has broadened the mindsets

of executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories

However research shows that as markets competition and organisations

globalise the business people businesses themselves and consumers

involved in these institutions increasingly have to interact manage negotiate

and compromise with people from different cultures (Hofstede 1997

Hoecklin 1995) Global business managers report that when doing business

overseas challenges mount For example structural conditions physical

social and economic arrangements can affect business operations and

outcomes as can the varied norms and behaviours that come with different

national cultures

One such new trajectory is the concern with national culture Whereas

traditional IB research has been concerned with economiclegal issues and

organizational forms and structures the importance of national culture

broadly defined as values beliefs norms and behavioral patterns of a

national group (Hofstede1980) has become increasingly important in the last

two decades largely as a result of the classic work of Hofstede (1980)

3

National culture has been shown to impact on major business activities from

capital structure (Chui et al 2002) to group performance (Gibson 1999) For

reviews see Boyacigiller and Adler (1991) and Earley and Gibson (2002)

Weisinger and Trauth (2003) report that culture evolves and takes unique

forms in local offices of organizations This means that culture is both dynamic

and situated in its local context Thus external conditions both structural and

cultural can influence global business Yet small and medium enterprise

(SMEs) managers can have an impact on how their organizations‟ cultures

evolve Therefore strategic leaders need to introduce unique norms values

and processes that fit together coherently in successful organizations

Therefore the main purpose of this case study is to explore and understand

the Small Medium Enterprise (SMEs) business environment in Mauritius and

how SMEs can penetrate the business culture there

The purpose of this paper is therefore to explore and understand how national

culture influences international business decisions and how to culture affects

international business investment using Mauritius as a case study

In this chapter the author outlines the background of the study specifies the

study objectives describes the significance of the study gives methodological

overview and finishes off by outlining definitions of key terminologies

4

11 Background to the Study

Strategically located in the Indian Ocean at the crossroads of Africa and Asia

Mauritius is reputed for its beautiful countryside and its 150 kilometres of white

sandy beaches and transparent lagoon A British colony that gained

independence in 1968 officially known as Republic of Mauritius the country is

positioned to the east of the Madagascar Islands The geographical

coordinates of the nation are 20ordm17 South latitude and 57ordm33 East longitude

The total area covered by the island nation is 2040 square kilometres

Mauritius enjoys a maritime sub-tropical climate and is therefore an all-year-

round holiday destination From a monocrop economy depending mainly on

sugar it has diversified its economic activities into textile and apparel

industry tourism and financial service Mauritius has witnessed a massive

development in the last decades (SMIDO 2006)

5

Figure 1 Map of Mauritius showing all Provinces

Source Encarta World atlas online

6

Figure 2 Mauritius map showing political divisions of the country

Source Maps of the world online

The research area was around the capital city Port Louis marked in red For

anonymity the site was just called A or B Administratively Mauritius is divided

into nine Provinces (figure 2)

The country is remarkable in its ethnic diversity It forms a unique mosaic of

immigrants from the Indian sub-continent Africa Europe and China The

cultural diversity and harmony of the island make Mauritius a unique place in

the world The various religions found on Mauritius tend to play a major part in

7

the islands cultural events and churches temples and mosques are to be

found everywhere Hindus make up approximately half of religiously affiliated

Mauritians followed by Muslims and Christianity as the minority It is also

known for its social peace political stability and racial harmony Its steady

economic growth over the years coupled with its nation‟s social cohesion and

prosperity ensure continuing development (Country Profile 2005)

The country is equipped with a highly skilled labour force to suit virtually all

business in two international languages English and French and a very good

infrastructure thereby attracting Foreign Direct Investment The average

economic growth was 56 over the last 3 years The income per Capita has

reached 4000 US Dollars As a result the standard of living has gone up The

country has now a life expectancy rate of 714yrs an adult literacy rate of 83

(Country Profile 2005)

To face globalisation and a new economic environment the Government has

taken several steps High value-added capital intensive and knowledge-

based activities are on the priority list The Information Technology sector is

undergoing rapid changes so as to be fit for the next millennium The aim is to

make Mauritius a centre for high-tech and software services which can be

exported (Commonwealth Secretariat 2006)

8

12 An Overview of Mauritian Economy

The economy of Mauritius has experienced major structural transformation

over the last two decades The country has moved away from a mono-crop

economy with fast population growth high unemployment and low per capita

income to one that is more dynamic and diversified The sources of

diversification have been agriculture export manufacturing (mainly textile)

tourism and more recently international services with Offshore and Freeport

activities (Country profile 2005)

To respond to the global competition in these sectors Mauritius has made

extensive use of modern technology to improve its productivity and efficiency

The real growth rates have been around 54 over the past four years and

Mauritius is now classified as a middle-income country and is one of the

healthiest economies in the whole African region (Country profile 2005) The

sugar sector provided the start-up capital for the Export Processing Zones

(EPZ) The rapid rate of growth of investment in the manufacturing sector

(investment grew by over 30 each year from 1983 until the late 1990s in this

sector) that led to the success of the EPZ and the Mauritian economy as a

whole This was made possible by the confidence of entrepreneurs and

foreign investors prevailing in the country at that particular time The private

sector accounts for approximately 70 of total capital formation in Mauritius

Investment rate stood around 27 in the four years ending 1996 peaking to

30 in 1994 (SMIDO 1996)

9

When the government recommended the diversification of the economy with

the creation of Export Processing Zones in the early 1980‟s the EPZ sector

benefits from duty-free and quota free access into European Union markets

granted under the Lomeacute Convention as well as tariff preferences granted

under the General System of Preferences (GSP) by countries such as North

America and Japan The mid 1980s witnessed a textile boom raising per

capita incomes and living standards However the conclusion of the Uruguay

Round (General Agreement on Trade amp Tariffs) implies the loss of guaranteed

markets and preferential access which will result in strong competition in

these respective markets (Country profile 2005)

The new strategy of the industrial sector aims at targeting high quality and

high value added products with a view to restoring the competitiveness of the

goods by applying latest technology to the manufacturing industry and hence

improving the quality of the finished products Limited data is available

regarding the SME sector in Mauritius The current research has observed

that there is little research in the field in SME sector in Mauritius

In view of the importance of foreign investment as a source of sustenance to

economic growth the government of Mauritius has taken a series of policy

measures to encourage its flows into manufacturing offshore banking and

financial services information technology communication and tourism As far

as foreign investors are concerned Mauritius offers itself as an attractive

destination because several positive features such as political stability

10

availability of skilled labour and investment-friendly rules and institutions

(Stone 1997)

With such a promising economy there is virtually no evidence on how to

penetrate the business culture in Mauritius and how culture can affect SMEs

and business opportunities therefore this study will explore and understand

the business environment in Mauritius and the challenges of doing business

there as a foreign investor Currently there is very little research done on

SMEs and culture in Mauritius

13 Mauritius SME Background

Experience shows that attitudes towards small business vary from decade to

the next from country to country Before the industrial revolution all business

was small business but with industrial and commercial expansion of

developed nations small has become medium and medium has become big

business

Business owners and managers have often seen growth as an end in itself

and at time the cry get big or get out has been heard in most nations

(Meredith 2004) For more than two decades SMEs have experienced

favourable growth SME has long been prominent in the countrys economy

and make up a large portion of national economy in terms of output

employment and effective utilisation of regional resources Small and medium

enterprises in Europe make up 998 of all European enterprises provide

66 of its jobs and account for 65 of its business turnover (Meredith 2004)

11

In developing countries SMEs account more than 90 of all enterprises

Over the last five years they have been responsible for more than 80 of job

created (Stone 1997) On the issue of job creation Stone (1997) found that

SMEs create more employment than large enterprises and with a lower

investment per job created SMEs are not usually associated with international

activity but they do in fact play a significant international role and their

importance appears to be increasing Available data on SMEs international

activity are very limited (Stone 1997)

In general terms and depending on the country SMEs contribute between

15 and 50 of exports and between 20 and 80 of SMEs are active

exporters Overall it is estimated that SMEs now contribute between 25 and

35 of world-manufactured exports (UN 2005) Increased exports not only

boost the level of sales and employment but also extend the life cycle of

goods and services

In Mauritius SMEs represent 19 according to a report issued by the

Commonwealth Secretariat entitled a Study of Small Firm export Policies

and Institutions in Mauritius Subsequently these SMEs have developed

gradually and move from their tradition orientated operations to export-led

firms probably due to improvement of technology in the field of communication

and the new economic dimension which prevailed

At this juncture it is important to report that few studies on culture and small

and medium entrepreneurship have been conducted on Sub-Saharan Africa

12

There is a paucity of information and even those scarce studies they do not

cover broad perspectives of the situation of SMEs in Sub-Saharan Africa

Therefore this study builds upon the existing limited body of research

regarding how business cultures contribute to the success or failure of small

and medium entrepreneurs In particular it explores the business culture in

Mauritius and its barriers to penetration for new and foreign small and

medium entrepreneurs

14 Purpose Statement

The purpose of this study was to understand the concept on how to penetrate

an international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

15 Aims and Objectives

To investigate the challenges of national cultural differences in

business in Mauritius

To investigate how to penetrate the business environment for a new

and or foreign business culture especially in Mauritius

To investigate business opportunities for SMEs in Mauritius and how

these can benefit the locals

13

16 Research Question

How can Small and Medium Enterprises penetrate the business culture in

Mauritius

These sub-questions all pertain to SMEs business

o 161 SUB-QUESTIONS

What kind of businesses are operating in Mauritius now

What are their business strategies (marketing brands) etc

What are the necessary mechanisms for establishing business in

Mauritius

What are the business needs of established and starting businesses

What are the mechanisms for potential growth of local business

What are the challenges for doing business in Mauritius

How much of business behaviour is influenced by the national culture

17 The Significance of the Study

The findings of the current study will increase the understanding of cultural

barriers to market penetration for SMEs in Mauritius The study adds

knowledge to the body of literature in this area focusing at further

improvement of understudying of culture and business issues The

study becomes part of the universitys education development in line with its

obligations to the communities and the country This research problem arose

from an information need of a particular client This research therefore will try

to explore the client‟s information need and probably contribute to the wealth

of knowledge

14

18 Definitions

CULTURE Hofstede (1997) defines culture as ldquothe collective programming of

the mind which distinguishes the members of one group or category of people

from anotherrdquo It is the norms beliefs and values common to a society

Culture is about the way people understand their world and make sense of it

It only when this is taken for granted assumptions are challenged that people

realise that they even exist (Hofstede 1997)

ENTERPRISE An enterprise is considered to be any entity engaged in an

economic activity irrespective of its legal form This includes in particular

self-employed persons and family businesses engaged in craft or other

activities and partnerships or associations regularly engaged in an economic

activity (European Commission 2003)

INTERNATIONAL BUSINESS International business consists of transactions

that are devised and carried out across national borders to satisfy the

objectives of individuals and organizations The Primary Types of International

Business Activities Are Importing and Exporting Direct Foreign Investment

(Govindarajan and Gupta 2001)

GLOBALISATION refers to a bdquogrowing economic interdependence among

countries as reflected in the increased cross-boarder flow of three types of

entities goods and services capital and knowhow‟ (Govindarajan and Gupta

2001 4)

15

SMALL AND MEDIUM INTERPRISES (SME) is made up of enterprises

which employ fewer than 250 persons and which have an annual turnover not

exceeding EUR 50 million andor an annual balance sheet total not

exceeding EUR 43 million (European Commission 2003)

In Mauritius an SME has been redefined taking into account the volume of

investment in equipment which was previously one million up to 10 millions

Mauritian Rupees presently to be classified as a small enterprises and with

less than 50 and 200 employees for small and medium scale respectively

(Stone 1997)

16

CHAPTER TWO

LITERATURE REVIEW

The aim of this chapter is to introduce conceptual themes that are important in

order to understand the role of culture in international business The chapter

discusses the context of relationship between culture and international

business practices in small and medium enterprises (SMEs) and the major

challenges they face in the area of globalisation A model adopted from Putz

(2000) forms a framework for articulating the conceptual role that culture has

in international business using Mauritius as a case study

21 Embracing Cultural change in an era of globalization

A significant theoretical issue for international business is the role of culture in

the whole aspect of information transformation Since the landmark study by

Haire et al (1966) and the publication of Industrialism and Industrial Man by

Kerr et al (1960) researchers have continued to search for similarities in

culturally specific beliefs and attitudes in various aspects of work related

attitudes as well as consumption patterns and other behaviours If cultures of

the various communities of the world are indeed converging (Heuer et al

1999) International Business (IB) related practices would likely become

increasingly similar For example standard culture-free business practices

would emerge and inefficiencies and complexities associated with divergent

beliefs and practices in the past era may disappear (Heuer et al 1999)

17

Studies elsewhere suggest that culture gets affected by globalization practices

in the current 21st century Globalization has seen flows of information

technology money and people and is conducted via international

government organizations such as the African Union the North American

Free Trade Agreement (NAFTA) and the European Community global

organizations such as the International Organization for Standardization

(ISO) multinational companies (MNCs) Also includes cross-boarder alliances

in the form of joint ventures international mergers and acquisitions These

interrelationships have enhanced participation in the world economy and

have become a key to domestic economic growth and prosperity (Drucker

1995 153)

Literature suggests that because globalization tends to redistribute economic

rewards in a non-uniform pattern a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) Strong opposition to

globalization usually originates from developing countries that have been

affected by the destabilizing effects of globalisation However in recent years

there have been heated debates in Western economies triggered by

significant loss of professional jobs as a result of offshoring to low wage

countries (Schaeffer 2003)

Workers in manufacturing and farming in advanced economies are becoming

increasingly wary of globalization as their income continues to decline

18

significantly In parallel to the angry protests against globalization the flow of

goods services and investments across national boarders has continued to

fall after the rapid gains of the 1990s The creation of regional trade blocs

such as NAFTA the European Union and the Association of Southeast Asian

Nations have stimulated discussions about creating other trade zones

involving countries in South Asia Africa and other parts of the world

Although it is often assumed that countries belonging to the World Trade

Organization (WTO) have embraced globalization the fact is that the world is

only partially globalized at best (Schaeffer 2003)

Many parts of Central Asia and Eastern Europe including the former

republics of the Soviet Union parts of Latin America Africa and parts of

South Asia have raised heightened scepticism about globalization (Greider

1997) In fact less than 10 of the world‟s population are fully globalized (ie

being active participants in the consumption of global products and services)

(Schaeffer 2003)

According to Guile`n (2001) these trends might indicate that globalization is

being impeded by tendencies towards country-specific modes of economic

development making the convergence of IB-related values and practices

difficult to achieve Hofstede (1980)‟s favourite definition of f ldquoculturerdquo is

precisely that its essence is ldquocollective mental programmingrdquo it is that part of

peoples conditioning that they share with other members of their nation

region or group but not with members of other nations regions or groups

Hofstede (2001) asserts that these mental programs of people around the

19

world do not change rapidly but remain rather consistent over time His

findings tend to suggest that cultural shifts are relative as opposed to

absolute Although clusters of some countries in given geographical locales

(eg Argentina Brazil Chile) might indicate significant culture shifts towards

embracing Anglo values the changes do not diminish the absolute differences

between such countries and those of the Anglo countries (ie US Canada

UK)

According to Hofstede (1980) Examples of differences in mental

programming between members of different nations can be observed all

around us One source of difference is of course language and all that

comes with it but there is much more In Europe British people will form a

neat queue whenever they have to wait not so the French Dutch people will

as a rule greet strangers when they enter a small closed space like a railway

compartment doctor‟s waiting room or lift not so the Belgians Austrians will

wait at a red pedestrian traffic light even when there is no traffic not so with

the Dutch Swiss tend to become very angry when somebody-say a foreigner

makes a mistake in traffic not so with the Swedes All these are part of an

invisible set of mental programs which belongs to these countries‟ national

cultures Such cultural programs are difficult to change unless detaches the

individual from his or her culture Within a nation or a part of it culture

changes only slowly (Hofstede 1980)

20

This is the more so because what is in the minds of the people has also

become crystallized in the institutions namely government legal systems

educational systems industrial relations systems family structures religious

organizations sports clubs settlement patterns literature architecture and

even in scientific theories All these reflect traditions and common ways of

thinking which are rooted in the common culture but may be different for other

cultures (Hofstede 1980)

22 The dynamics of Culture as a Multi-level Multi- layer construct

Multi-level approaches of viewing culture as a multi-level construct that

consists of various levels nested within each other from the most macro level

of a global culture through national cultures organisational cultures group

cultures and cultural values represented the self aspect of the individual See

figure 3

21

Figure 3 The dynamic of top-down-bottom up process across levels of

culture (Source Schein 1992)

The model proposes that culture as multi-layer construct exist at all levels

from global to the individual Changes that take place at the external layer of

behaviour are most likely shared by individuals who belong to the same

cultural background level hence characterising the aggregated unit (Schein

1992)

Top-

Down

Individual

Behaviour

Values

Assumptions

Global Culture

National Culture

Organizational Culture

Group Culture

Bottom

Up

22

Below the global level are nested organizational layers or networks at the

national level with their local cultures varying from one nation or network to

another Further down are local organizations and although all of them share

some common values of their national culture they vary in their local

organizational cultures which are also shaped by the type of industry that

they represent the type of ownership the values of the founders etc Within

each organization are sub-units and groups that share common national and

organizational cultures but differ from each other in their unit culture based on

differences in functions of their leaders‟ values and the professional and

educational level of their members At the bottom of this structure are

individuals who through the process of socialization acquire the cultural values

transmitted to them from higher levels of culture Individuals who belong to the

same group share the same values that differentiate them from other groups

and create a group-level culture through a bottom-up process of aggregation

of shared values (Schein 1992)

Both top-down and bottom-up processes reflect the dynamic nature of culture

and explain how culture at different levels is being shaped and reshaped by

changes that occur at other levels either above it through top-down

processes or below it through bottom-up processes(Schein 1992) Similarly

changes at each level affect lower levels through a top-down process and

upper levels through a bottom-up process of aggregation The changes in

national cultures observed by Inglehart and Baker (2000) could serve as an

23

example for top-down effects of economic growth enhanced by globalization

on a cultural shift from traditional values to modernization

In view of the complexity of the organizational structures specific

organizational structures that have global character need to be established so

as to adopt common rules and procedures in order to have a common

bdquolanguage‟ for communicating across cultural borders (Kostova 1999 Kostova

and Roth 2003 Gupta and Govindarajan 2000)

Given the dominance of Western Multi National Companies (MNCs) the

values that dominate the global context are often based on a free market

economy democracy acceptance and tolerance of diversity respect of

freedom of choice individual rights and openness to change (Gupta and

Govindarajan 2000) The multi-level structure explains how a lower-level

culture is being transformed by top-down effects and that the cultural layer

that changes first is the most external layer of behaviour In the long run

bottom-up processes of shared behaviours and norms would affect the local

organizational culture as well (Schein 1992)

23 International Business and Culture

Knowledge of cultural differences is one of the key components in

international business practices and success Improving levels of cultural

awareness can help companies build international competencies and enable

individuals to become more globally sensitive (Hofstede 2003) Indeed

cultural differences contribute towards different ways people behave in

24

business Research in the field of international management underscores that

the attributes of cultural knowledge used by a firm play an important role in the

firms expansion For example Martin and Salomon (2003) found that cultural

orientation in entrepreneurial action is a central theme and can serve as a

starting point for immigrant business

ldquoUnderstanding the culture and the conceptualisation of culture in conjunction with entrepreneurial action is a critical issue when doing business in an international environment Contributions of economic geography inspired by the cultural turn which shows alternative ways of thinking about the connection between culture and economy by using a new understanding of culture are also critical (pg 198)rdquo

The statement underscores the important of understanding the culture of a

society before attempting to do business there otherwise the company runs a

risk of going out of business The ways in which different groups of people

interpret their environment and organise their activities is based the on the

specific cultural values and assumptions Certain values often thought to be

universal really do differ from culture to culture What constitutes an ethical

business practice is not the same everywhere This can be an enormously

difficult area in managing business across cultures (Straub et al 2002)

Although one may claim cultural differences to be going away they are

actually being absorbed in the business practices This makes it more critical

than ever to try to understand different cultures and their influence on the

ways people do business and view the world The costs of not understanding

are getting greater than ever The essence of culture is not what is visible on

the surface It is the shared views about what people understand and interpret

25

the world These cultural differences are crucial influences on interactions

between people working and managing across culture (Gertler 1997)

The social behaviour of a society is embedded in a particular context and is

connected to other deeply held values and beliefs (Weisinger and Trauth

2003) This means that the stakes are high for mismanaging cultural

differences Ignoring or mishandling differences can result in an inability to

retain and motivate employees a misreading of the potential of cross-border

alliances marketing and advertising blunders and failure to build sustainable

sources for competitive advantage Mismanaging cultural differences can

render otherwise successful managers and organisations ineffective and

frustrated when working across cultures (Weisinger and Trauth 2003)

24 Putz Model For Immigrant Business and Culture

Literature in the field of Immigrant Business differentiates mainly between two

basic approaches each with a different emphasis which are combined to

explain entrepreneurial action of immigrants (Putz 2000) The first approach

emphasis the bdquoopportunities‟ offered by the host country including access to

the market and job market conditions The second approach focuses on the

bdquoresources‟ of migrant groups from whom the concept of culture becomes

essential (see Figure 1 below)The Putz (2000) cultural model below is a

summary of explanatory approaches following the assumption that self

employment of certain groups is the result of their specific cultural

predisposition which favours business activity

According to Putz‟s (2000) view of cultural model the bdquoopportunities‟

approach which refers to market possibilities as an explanation for self

26

employment of immigrants assume that there are certain market segments

with favourable development perspectives especially for immigrant groups

Here two factors receive special attention which are niche markets and legal

and institutional frameworks Niche markets make the establishing of business

by immigrants easier because their needs for consumer goods create specific

demand Legal and institutional frameworks gain awareness in international

comparative studies through restrictions specified by a country regarding

business permits and regulations these frameworks influence both the extend

and the sectored structure of the bdquoimmigrant business‟ (Putz 2000)

According to Putz (2000) the observation that most immigrant groups show a

higher level of self employment rate than others often forms the background

explanation which focus on opportunities created by the host society

Resource models stress the shared characteristics of migrants of same origin

Resources models explain that certain groups have specific cultural

resources which make it easier for members of that group to become self

employed therefore one can distinguish between the cultural traditions and

socialethnic networks ( Putz 2000)

27

Figure 4 Dominating models concept of bdquoImmigrant Business‟ (Source Putz

2000)

OPPORTUNITIES

Market Access

Possibilities

Market Conditions

Niche Markets

lsquoOpenrsquo Markets

Job Market

Conditions

Access

Vertical Mobility

Legal and Institutional

Frameworks

lsquoEthnicrsquo

Business

RESOURCES

lsquoClass Resourcesrsquo lsquoCultural Resourcesrsquo

Cultural

Traditions

Social lsquoEthnicrsquo

Resources

28

When successfully managed differences in culture can lead to innovative

business practices faster and better learning within the organisation and

sustainable sources of competitive advantage (Sondergaard and Hofstede‟s

1994) In relation to that the current study argues that managers need to

study and understand the culture and the niche market before investing This

assumption has been raised as a result of the previously reported experiences

and research findings already reported so far It is therefore critically important

to understand that every society has got its own way of behaving which needs

to be understood if the business is to succeed Operating companies need to

understand what their business means to the people of the given community

and their culture

Several studies of international business have indicated that

internationalization of the firms is a process in which the firms gradually

increase their international involvement(Johanson amp Wiedersheiml 1995

Gibson 1999 Chui et al 2002 ) It seems reasonable to assume that

within the frame of economic and business factors the characteristics of this

process influence the pattern and pace of internationalization of firms Figure

5 below shows a model of the internationalization process of the firm that

focuses on the development of the individual firm and particularly on its

gradual acquisition integration and use of knowledge about foreign markets

and operations and on its successively increasing commitment to foreign

markets The basic assumptions of the model are that lack of such knowledge

is an important obstacle to the development of international operations and

that the necessary knowledge can be acquired mainly through operations

abroad (Johanson and Wiedersheiml1995)

29

FIGURE 5 The Basic Mechanism of Internalisation- State and Change Aspects

Figure 5 Basic Mechanism of Internalisation (Source Johanson amp

Wiedersheiml 1995)

Market knowledge and market commitment are assumed to affect both

commitment decisions and the way current activities are performed These in

turn change knowledge and commitment ( Aharoni 1966) In the model it is

assumed that the firm strives to increase its long-term profit which is

assumed to be equivalent to growth (Williamson 1966) The firm is also

striving to keep risk-taking at a low level These strivings are assumed to

characterize decision-making on all levels of the firm Given these premises

and the state of the economic and business factors which constitute the frame

in which a decision is taken the model assumes that the state of

internationalization affects perceived opportunities and risks which in turn

influence commitment decisions and current activities (Johanson amp

Wiedersheiml 1995)

Market

Knowledge

Market

Commitment

Commitment

Decisions

Current

Activities

30

2 5 The Role Of Information Communication Technologies

Hofstede (2001) observed that not only will cultural diversity among countries

persist but also new technologies might even intensify the cultural differences

between and within countries Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

Information communication technologies (ICTs) enable users to access varied

amounts of information globally however it does not necessarily increase

their capacity to absorb the information at the same rate as the information is

disseminated or diffused (Bhagat et al 2002) In addition information and

knowledge are interpreted through cultural lenses and the transfer or diffusion

of organizational knowledge is not easy to accomplish across cultural

boundaries (Bhagat et al 2002)

Ethnic groups around the world observe the lifestyles and cultural values of

other countries and some are interested in adopting part of the lifestyle and

values but others reject it completely (Kirkman and Shapiro 2000) The

effects of new technologies on improving efficiencies of multinational and

global corporations are well known but it is not known how these new

technologies especially computer-mediated communication and the Internet

31

might create significant shifts in the cultural patterns of different ethnic groups

(Kirkman and Shapiro 2000) or on their ways of doing business

In essence there in need to explore how the spread of ICTs is affecting the

progress of globalization in different parts of the world by incorporating the

role of cultural syndromes organizational cultures and other processes

which has recently been attempted by scholars such as Bhagat et al (2003)

and Gibson and Cohen (2003)

Information and Communications Technology (ICT) has become a catchword

with different interpretations and viewpoints even among experts As the

name suggests ICT encompasses all the technology that facilitates the

processing transfer and exchange of information and communication

services In principle ICTs have always been available since the advent of the

printing press The only difference is that from the late twentieth century rapid

advances in technology changed the traditional ways in which information was

processed communications conducted and services available (Adu 2002)

These technological advances have changed business operations and the

way people communicate They have introduced new efficiencies in old

services as well as numerous new ones One could even imagine going as far

as replacing the term Post-industrial Society with ldquoInformation Society that

is a society where the ability to access search use create and exchange

information is the key for individual and collective well-being (Kaplan 2001)

32

Globally entrepreneurship is considered as the engine of economic

development The SME sector has the potential to address socio-economic

challenges facing both developing and developed countries Without small

business development it is argued that economies stagnate unemployment

levels continue to rise and the general standard of living deteriorates

Information and communications technology (ICT) has been identified as a

major area of need to develop the SME sector in areas of information

provision access to national and international markets and other areas of

business development and support ( Ferrand and Havers 1999)

ICTs enable entrepreneurs to manage their businesses efficiently and thus

enhancing their competitiveness in the global market They can increase their

geographic reach improve efficiency in procurement and production and

improve customer communications and management For these reasons the

need to encourage and accelerate the uptake and optimal application of ICTs

by SMEs in different sectors of the economy cannot be overemphasized

(Ramsay et al 2003) The ICT sector has the potential to absorb prospective

entrepreneurs considering various business opportunities offered by the

sector Some of the business opportunities available within the sector relate to

systems integration application development database administration web

design and internet service provision The sector is also seen as an area with

major opportunities for the historically disadvantaged sectors of the

population It therefore becomes imperative for government to provide

mechanisms to accelerate the entry of SMMEs into the ICT sector (ILO 2001)

33

26 Cross Culture and International Business

Cross-cultural management advice rests on several assumptions in the

tradition of Hofstede (1997) that a) that national culture is comprised of norms

and values that can be readily identified and addressed b) that these norms

values and patterns of behaviour are stable and change at an extremely slow

pace and c) that national culture predominates over organizational culture

epistemic culture gender or other determinants of attitudes and behaviour

According to Hosftede (1997) national culture is comprised of norms and

values that can be readily identified and addressed

Organisational culture (common values and attitudes) affects organizational

success and innovation develops over time and may be difficult to change

ldquoThere is a relationship between an organization‟s culture and its

performance The pervasive nature of organizational culture means that if

change is to be brought about successfully this is likely to involve changes to

culturerdquo (Mullins 1999)

An alternative view sees culture as more complex context-specific and

dynamic For example Weisinger and Trauth (2003) examined the interaction

of national cultures the IT industry culture and a particular firm‟s

organizational culture They observed that the resulting situated culture ldquois

fluid contextually dependent and created by actors within a group who may

hold conflicting assumptions and world viewsrdquo In other words culture is as

what it is because of what it does This means that management must ensure

34

that key capabilities for example marketing analytics or process controls are

developed and nurtured across the organization

Successful global managers recognize that they cannot respond to every

unique opportunity that local settings offer Thus there is an inherent tension

in cultural sensitivity a management team which is ldquotoo sensitiverdquo to cultural

and structural features exposes the organization to the risks that come with a

lack of focus and coherence while managers who do not take cultural and

structural features into account expose the organization to the risks that come

with organizational rigidity (Myres and Tan 2002)

According to Mistry (1999) entrepreneurial networks and clusters in sub-

Saharan Africa have not generally produced the kind of strong transnational

links that characterize Asia‟s flourishing pattern of industrial diffusion The

author states that the reasons for this are complex differences in geography

different models provided by leading countries in the neighbourhood and

policies adopted by governments in the respective regions Chinese business

networks are responsible for some of the information ideas and capital that

helped launch the small Indian Ocean nation of Mauritius as an important

centre for export-oriented industry The Chinese networks in Mauritius also

continue to facilitate a role that Mauritius first began to play in the eighteenth

century they serve as a gateway for overseas Chinese entrepreneurs

interested in investing both in Mauritius and elsewhere in Africa (Mistry 1999)

35

27 Investing in Mauritius

There are a lot of advantages in investing in Mauritius The economy of the

country is stable and the graph of the economy and business is one the rise

for a considerable period of time The Mauritius government has undertaken a

sequence of strategic measures to support its course into offshore banking

manufacturing and financial services communication technology and tourism

keeping in mind the significance of foreign investment as a basis of

nourishment of the financial development (Dabee and Greenaway 2001)

According to Dabee and Greenaway (2001) tthere are various factors that

influence financiers to invest in Mauritius like accessibility of skilled labor

political constancy and venture-friendly institutions and regulations One of

the major factors for the development of Mauritius is the Foreign Direct

Investment (FDI) The government of Mauritius has given all the necessary

support to create the most favorable investment setting by the following steps

Building modern infrastructure

Endorsing suitable legislations

Commencing packages of investment inducements

Investing in human capital

Some of the advantages of investing in Mauritius are as follows

High-quality infrastructure with superb transportation

Democracy and a steady government

Free market financial system fastened on export slanting activities

Excellent system of sea and air transport

36

High standard of living good international schools

A highly educated bilingual and responsive work force

Knowledgeable financial segment providing outstanding services

Constructive market contact and good inducements ( IBP 2002)

Mauritius has various sectors where investment can be made like Information

and Communication Technology and manufacturing For doing business in

Mauritius registered trademark is required The trade marks for business are

issued by the registered Patents and Trademarks sector of Ministry of Foreign

Affairs International Trade and Cooperation In the country of Mauritius a

foreigner is eligible to hold 100 shares In this case one of the directors of

the company has to inhabit in Mauritius and the foreign individual has to

obtain a sanction from the Office of Prime Minister (IBP 2002)

In Mauritius the laws concerning income tax is based on the English law of

income tax The companies in Mauritius are lawfully accountable to pay out

income tax on their profits at an even rate of 25 A company which is

included in the country or has its scheming benefit in the country is measured

for tax reasons to be an occupant corporation To the Mauritius companies

various types of tax incentives are granted The companies that hold

certificate for Tax inducement are responsible to tax at an abridged rate of

15 while the scheduled companies are accountable to pay tax at the rate of

25 ( Dabee and Grrenaway 2001)

37

CHAPTER THREE

METHODOLOGY

Having looked at culture to some depth this chapter explains the methods

used in carrying out the study The study used mixed method approach to

allow for data corroboration and dynamism since the subject in question

needed dynamism and sensitivity in approach

This research mixed both qualitative and quantitative approaches to try and

get best possible research by combining both features because they

complement each other Quantitative data techniques condense data in order

to get a bigger picture whereas qualitative techniques are data enhancers

making it possible to see issues more clearly (Dawson 2002 Neuman 2000)

Attempt was made to keep in line with recommendation made in the Leeds

Declaration proposition number 6 which calls for the application of multiple

methods and perspectives to try and understand social and cultural issues

(Hunter and Lang 1993) Mixing qualitative and quantitative methods also

called positivist and interpretive respectively (Gilbert 2001 and Bowling 2002)

is effective in a complex issue study such as this one because they highlight

different perspectives of the same problem in this case - the public in parallel

with the individual level(Gilbert 2001) This is because quantitative methods

adopt a numerical approach to data collection and analysis to provide macro

level perspective whereas qualitative methods provide micro level perspective

through collecting data from individuals (Ibid)

38

There was also use of impersonal (public) documentation using official

records which were more library based research (Grbich 1999) on top of

theory generating field based methods (Ibid) Many researchers (Bowling

2002 Neuman 2000 Grbich 1999 Denscombe 2003 and Gilbert 2001)

concur that neither of the methods is superior to the other but just different

each having its strengths and weaknesses (Dawson 2002)

The study sought to explore the attitudes behaviour subjective meanings and

experiences of the participants making qualitative approaches best suited

because they emphasize the importance of context (Neuman 2000) However

to generate objective and factual (Maynard and Purvis 1994) statistical

figures quantitative research was more suitable Hence mixing of methods

(Dawson 2002 Denscombe 2003) to counteract weaknesses in both

approaches to give breadth and width to the study (Maynard and Purvis

1994) The flexibility of qualitative research allowed for re-focusing and

refinement of the tool dependent on participants‟ reactions throughout

(Neuman 2000) to pick up any emerging evidence thus applying the

grounded theory approach (Dawson 2002)

39

31 Research Setting

Mauritius is a volcanic island of lagoons and palm-fringed beaches in the

Indian Ocean Southern Africa east of Madagascar with a population of

about 12 million has a reputation for stability and racial harmony among its

mixed population of Asians Europeans and Africans The island has

maintained one of the developing worlds most successful democracies and

has enjoyed years of constitutional order since independence in1968 Over

the past three and half decades the country has been transformed from one

of the poorest in the world to a middle income country with per capita Gross

Domestic Product US $7000 (World Bank 2006) It has preserved its image

as one of Africas few social and economic success countries that mainly

depends on sugar and clothing export and a centre for upmarket tourism But

Mauritian exports have been hit by strong competition from low-cost textile

producers and the loss of sugar subsidies from Europe Consequently

attention has turned to diversification in line with global trends

To this end SMEs have been identified as important instruments to achieve

economic diversification Today the government vigorously supports SMEs

through a range of strategies eg the creation of a business friendly climate

via import liberalisation tax reforms and the launch of the SME Partnership

fund which gives subsidized loans to aspirant SME owners and makes the

availability of finance and facilitating access in particular for those enterprises

that have viable projects but are short of equity The Small Enterprises amp

Handicraft Development Authority (SEHDA) was created following the merger

of the Small amp Medium industries Development Organisation (SMIDO) and the

National Handicraft Promotion Agency (NHPA) The aim of the merger is to

40

rationalize and optimize the use of resources dedicated to the small business

sector in Mauritius

Various cultures and traditions flourish in peace though Mauritian Creoles

descendants of African slaves who make up a third of the population live in

poverty and complain of discrimination Mauritius was uninhabited when the

Dutch took possession in 1598 Abandoned in 1710 it was taken over by the

French in 1715 and seized by the British in 1810 The culture of the country

reflects its diverse ethnic composition There are many religious festivals

some important ones being (in random order) Divali (the hindu festival of

lights in October) Christmas Cavadee (a penitence festival of the south

Indian tradition of hinduism in January) Eid ul Fitr (celebrating the end of the

period of fasting in Islam As the Islamic calendar does not correspond to the

Gregorian calendar the date of its celebration in the year tends to vary In

2003 it was celebrated in November) With such a strong history diverse

culture and such a promising economy painted above makes Mauritius a rich

setting to investigate culture and small medium business entrepreneurship

32 Methods

As justified already this study applied method mix to exploit the benefits of all

methods used while minimising the effects of their weaknesses The obvious

benefit of method mix is that it involves more data which is likely to improve

the quality of research (Denscombe 2003) and that is what the researcher

sought to achieve In deciding which method to use it was acknowledged that

the chosen methods were not superior in any way but more suited to the study

41

circumstances based on the premise of ldquohorses for courses (Denscombe

2003 page 83)

A Questionnaire used in the online web survey allowed for collection of

data from large numbers of participants economically since the project had

financial and time limitations (Ibid) The other advantage of survey exploited is

generation of quantitative data However weaknesses of the method

(empiricism lack of depth and accuracy of responses) were a challenge The

questionnaire was open ended and was completed by the participant in the

absence of the researcher Any questions arising from the participant not

understanding or misinterpreting the question where not taken care of Focus

groups were used to gain depth into some of the emerging issues from

questionnaires to gain insights into the issues surrounding widow inheritance

and to validate some of the data (Denscombe 2003) Telephone and face to

face interviews were used to gather to gain in-depth information on the

issues

All accessible literature on culture and investment in Mauritius as well as

other parts of Africa was reviewed to get insight into any related work to

identify key issues and current knowledge gap so as to sign post this study for

any audience (Ibid)

42

33 Research Participants and sampling

It was difficult to get exact demographic data for each sector Consequently it

was not possible to use any scientific sampling techniques The study

therefore used non-probability sampling (Neuman 2002 Bowling 2002

Denscombe 2003) targeting urban based population

The sample baseline characteristics were

SME managers from aged 18 years and above and over 65 was the

limit Any religion faith Any socio-economic background and residents

of Port Luis and surrounding areas

To sample for quantitative data purposive and snowballing sampling

techniques were used because it was not possible to apply any statistical

formula in getting the samples since there was no single list of SME managers

and other stakeholders to use with any form of probability sampling

Participants were snowballed from one sector to another until the whole

sectors were covered For the focus groups homogenous and critical case

(Grbich 1999) sampling was used to get particular sub group to provide

details In this case to get government officials and the private sector who

were strong enough to talk about their experiences

A total of 161 participants were reached from all the sectors These included

SME manager government officials and the private sector The researcher

wishes to point out that these numbers were not conclusive The numbers

could be much higher because in case the researcher phoned the participants

they were not available to take the call there was no time to go back to

43

ascertain the details Those who were not willing to take part in the study were

also excluded from the above figures For the focus groups discussions 5

government officials and the private widows were invited and used Skype

technology to do a conference

The times when the participants were contacted met were entirely dependent

on participant availability and other events at the time (Gilbert 2001) It varied

between 800 am and 700 pm in the evening because of the time differences

UK and Mauritius time Care was taken to avoid compromising times such as

late in the evening or culturally sensitive days such as weekends when people

were engaged in funerals and church services in this case

The participants showed weariness towards the study because as they put it

ldquoa lot of people come along claiming to collect data to help but never show up

againrdquo

34 Data collection Instruments

The researcher developed an online quantitative data collection questionnaire

(web survey form) which was posted on the university web server with help of

the department technicians A multiple recipient list was created from the

details in the SEHDA website and was randomly sent to the recipients These

only included the SME managers from the seven sectors About 20 contacts

were selected from each sector which made a total of 140 participants

Telephone interviews were made to about 17 government officials and the

private sector who were later divide n to focus groups and a teleconferencing

44

was organised on Skype Face to face interviews were done with government

officials from the Mauritian High Commission in the UK

Apart from the questionnaire an Olympus VN 2100 PC Digital Voice Recorder

was also used during the focus group discussion with the permission of

participants also on telephone interviews and face to face interviews This

was tested set and correctly positioned by the telephone speaker before the

session began to ensure proper functioning It was fitted with a mini

microphone to improve recording quality The digital voice recorder small in

size (only 68 grams in weight) proved user friendly because it was not

intruding too much into the face of participants as opposed to older recording

devices There was a pair of AAA batteries on standby in case the batteries in

use ran flat during the session

35 Ethical Considerations

This study involved very little of sensitive issues but it strived very much to

adhere to the fundamental principles of Human Research Ethics of Respect

for Persons Beneficence and Justice The researcher ensured autonomy self

determination and protection of vulnerable persons through informed consent

participation confidentiality and thorough explanation of what the research

was all about to those with limited knowledge and education Any risk that

might have resulted from the study was minimised as much as practically

possible and the researcher took full responsibility for the protection of

participants There was no form of discrimination other than on participant

baseline characteristics

45

The study also upheld the six key ethical research principles as stipulated by

ESRC - UK (ESRC 2005) To ensure anonymity pseudonyms were used for

participants The information gathered was safely protected through password

use on the computer system and only the researcher had access to the

information The researcher was responsible for storage and destruction of

any information no longer needed such as audio files after transcription

Research respondents participated in a voluntary way free from any coercion

and free to withdraw at any point should they felt uncomfortable

The first ethical committee whose approval was sought was the University of

Sheffield Ethical committee after which the researcher sought ethical approval

from Mauritian authorities through the relevant ministries It was not straight

forward getting ethical approvals in Mauritian but ultimately the ministry of

SMEs approval was obtained

36 Procedure

After all the necessary approvals were obtained the researcher wrote an

explanatory letter (Grbich 1999) or bdquoparticipant‟s information sheet‟ (appendix

5) which included information on informed consent (Denscombe 2003)

After piloting the tools the researcher started by making calls to make

appointment for interviews As the quantitative data collection went on

recruitment of participants to take part in qualitative aspect was done

simultaneously due to time constraints The researcher used individual

judgement to asses those participants who would be courageous enough to

respond to the questionnaire online and to the interviews The managing

46

director for RCBusiness Support Ltd also provided a number of potential

respondents who were used at the initial stages of the study Each interview

session lasted averagely 50 minutes The researcher went to organise the

teleconferencing for the focus group on Skype which also lasted for average

50 minutes

37 Data Analysis

Since the distinction between quantitative and qualitative research is not

watertight (Denscombe 2003) data analysis embraced both because they

have similarities and differences (Neuman 2000) There was analysis of

words and numbers thus holistic versus specific focus (Denscombe 2003)

The analysis adopted a five stages approach (Denscombe 2007) The first

stage was data preparation followed by data exploration analysis

presentation and finally validation

Though some researchers champion for advanced inferential statistics

(Denscombe 2007) the researcher opted for descriptive statistics for the

quantitative data analysis because they still remain effective ways of data

analysis and presentation (ibid) The research data involved nominal as well

as discrete and continuous data which could effectively be analysed using the

chosen method The data was grouped frequencies were described and

finally any linkages were identified The end product of the analysis process

is presented in the results section in various formats Basic statistical

techniques were used to give the data additional credibility in terms of

interpretations of the findings (Denscombe 2007)

47

For the qualitative data the first thing was to back up the original voice

recorded focus group discussion into a password protected lap top This

ensured not only the security of the data but also a back up in case of data

loss The researcher then listened to the recording several times to familiarise

himself with the data after which transcription took place After that the data

was interpreted and categories themes were identified since thematic

analysis was employed The Putz (2000) model was used as a guide to

finding themes The findings are presented in the results section

38 Planned programme of dissemination

The study findings were disseminated to all relevant stakeholders in print

format including the university as part of the postgraduate degree requirement

in academically fulfilling format Two copies of the report were sent to the

Ministry of SMEs in Mauritius and two copies to the Board of Investment of

Mauritius in the UK as part of the requirements of ethical approval and

research permission granted by the ministry

Finally it was hoped that the report would meet publication requirements so

that it could get a wider audience through a reputable journal

48

39 Time scale

The study was anticipated to take the following breakdown from the time all

ethical approvals and consent were obtained

Table 1 Table showing the study time scale

Stage Time allocation Action item Accountable person

I Weeks 1 - 3 Research set up Sampling and

access to participant negotiations

Angelinah Boniface

II Weeks 4 - 12 Data collection and Analysis Angelinah Boniface

III Weeks 12 - 16 Analysis Report writing and

dissemination

Angelinah Boniface

310 Limitations and Delimitations

This study was not fully funded as such high telephone costs travelling

affected the exercise Only business people in Mauritius both men and women

were interviewed The study covered both local and foreign investors

Participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

49

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

A major limitation is a low response rate of the questionnaire and therefore a

representative sample of the SME population was not achieved Thus any

conclusions made from the analysis of the collected data cannot be

generalized to the broader SME population Bias may have been inadvertently

introduced during interviewing caused from such things as leading questions

50

CHAPTER 4

RESEARCH FINDINGS AND DISCUSSION This chapter aims to discus the research findings from the study The chapter

is divided into two sections the first part presents and discusses the

quantitative data and the second part discusses qualitative It is therefore

worth mentioning that the Putz (2000) model was used to guide the

qualitative data analysis and some of the themes were taken from the model

and some were generated from the research findings It must be noted that

any findings uncovered from this study cannot be generalized to the broad

public domain regarding SMEs

Section A of the questionnaire and the interview guide included questions that

collected background information on the SME managers and the responding

firms These data constitute the substantive material for analysis in the

ensuing sections The tables below depict the socio demographic

characteristics of the survey participants age group gender educational level

and experience as ownermanager In the following sections there aspects

are discussed

51

41 RESPONDENTS RATE ACCORDING TO SECTORS

TABLE 2

SECTOR SEHDAS SURVEY SENT

SURVEY RECEIVED

RESPONSE RATE

Leather and Garments

1678 20 12 60

Wood and Furniture

2196 20 11 55

Paper Products and Printing

1541 20 9 45

Chemical Rubber and Plastic

1376 20 11 55

Pottery and Ceramic

793 20

17 85

Jewellery and Related Items

1674 20 13 65

Fabricated Metal Products

1267 20 14 70

TOTAL 7 140 101 72

Table 2 shows the response rates from various sectors of SME in Mauritius

which were targeted by the online survey As the table indicates pottery and

ceramic sub sector had the highest response rate (85) with paper products

sector giving the least response rate (45) Overall 72 response rate from

all the targeted sectors was satisfactory It is worth mentioning that the total

number of participants adds to 140 since this question was only directed to

sectors not to other stakeholder in the research sample

52

42 DEMOGRAPHIC PROFILE PARTICIPANTS

TABLE 3 AGE GROUP AS PER PARTICPANT

AGE GROUP FREQUENCY PERCENTAGE

-25 7 43

26-35 34 211

36-45 53 329

46-55 35 217

56-65 22 137

gt 65 11 63

TOTAL 161 100

Evidence from most of entrepreneurial literature suggests that self-

employment becomes an increasingly attractive option as one nears middle

ages As can be seen in table 3 respondent‟s ages ranged from 25 to 65 and

the largest proportion (329) of the participants was in the age range of 36ndash

45 Additionally participants were biased towards the age ranges of between

36 and 65 and away from the under 25 and over 65

TABLE 4 GENDER PROFILE AS PER PARTICIPANT

GENDER

Male 116 720

Female 45 280

TOTAL 161 100

53

In relation to gender the research sample was predominantly male (72) a

striking although unsurprising demographic characteristic that reflects the

composition of the larger business sector in the country as a whole

Consequently only (28) were females This is clearly illustrated in table 4

above

TABLE 5 EDUCATION PROFILE AS PER PARTICIPANT

EDUCATIONAL LEVEL

Primary 8 50

Junior-level 29 180

O-level 78 484

Diploma 34 211

Higher Degrees 12 75

TOTAL 161 100

As evident from table 5 the educational levels attained by respondents varied

considerably as follows Primary School Certificate (8 or 5) Junior

Certificate (29 or 180) Ordinary Level (78 or 484) Diploma (34 or

211) and higher Degrees (12 or 75 ) On the whole though the data

suggest that the educational levels of our respondents are low the largest

proportion (398) possessing an Ordinary Level certificate

54

TABLE 6 YEARS EMPLOYED AS CEO AS PER PARTICIPANT

Years Of Employed as CEO

0-3 44 273

4-7 88 546

8-14 15 94

15-19 11 68

Over 20years 3 19

TOTAL 161 100

Not surprisingly table 6 shows that most of the responding executives did not

have education that emphasized a business curriculum This can be

understood with respect to the Mauritian educational curriculum which largely

overlooked business subjects until very recently

The research sample participants had been employed at their current firms on

average 1467 years and had an average of 12 years experience in the

manufacturing industry Four predominant job titles used by the senior

executives emerged from the questionnaireinterview responses Managing

Director (38) Director (26) Manager (20) and Chief Executive Officer

(16)

55

43 CHARACTERISTICS OF RESPONDING FIRMS

This section presents the descriptive statistics of the responding firms The

description focuses on age of the firm employment size firm revenues and

firm ownership

TABLE 7 COMPANY AGE PROFILE

Age of Company Frequency Percentage

1- 3 years 44 314

4- 6 years 68 486

7-10 years 19 136

11-15 years 7 50

Above 15 years 2 14

TOTAL 140 100

Table 7 displays the statistical data Of the firms responding the largest

proportion (486) was 4 to 6 years old Overall the sample reveals a skewed

distribution towards the ranges between 4 and 15 Also it is interesting to note

that 915 of the responding firms are mature that is beyond the start-up

phase

TABLE 8 EMPLOYEE PROFILE AS PER PARTICIPANT

Number of Employees

50-99 101 721

100-200 39 279

TOTAL 140 100

56

Unsurprisingly the vast majority of the responding businesses had fewer than

100 employees as depicted n table 8 with the largest proportion (701) in

the 50ndash99 employee categories The study found out that most small

companies would opt to have family and relatives as employees to minimise

costs Only 32 average of the firms were medium-size The preponderance

of small firms in the sample mirrors a more general pattern of firm distribution

in the country where medium and large firms are a conspicuous small

minority

TABLE 9 ANNUAL SALES AS PER COMPANY

Annual Sales

Less than R100 000 88 629

R101 000- R250 000 36 257

R251 000- R15 million 11 79

Above 15 million 5 35

Total 140 1000

As shown in table 9 the largest proportion of responding firms 88or 629

achieved a turnover below R10000000Only scant 11 or 79 posted annual

revenue in excess of R15 million

57

TABLE 10 OWNERSHIP AS PER PARTICIPANT

Ownership

Wholly Citizen 76 550

Joint Venture 42 293

Foreign Owned 22 157

TOTAL 140 100

Regarding ownership table 10 shows that an overwhelming majority or 550

of firms were wholly citizen-owned while the remaining 293and 157

were joint venture with citizen stake and foreign-owned respectively

44 Language

From most of the participants investors do not have to learn Local Mauritius

language since English and French are the official languages in the country

Since most of the investors to Mauritius are either English or French speaking

language as such is not a barrier to business practices and success for

prospective investors

ldquohellipwell it is not very important for foreign investors to learn languages

spoken in Mauritius because we can speak both English and Frenchrdquo

[Participant A5]

ldquohellipactually language is not barrier to English or French speaking investorsrdquo

[Participant A21]

58

Language is perhaps the most complex and perplexing aspect of the

Mauritian social mosaic (Rassool 1996) Contrary to the results that show that

language is not a problem for investors since most of the investors who come

to Mauritius are English or French speakers who normally fits well in the

society since these are the two official languages

This intricacy derives from the number of languages spoken combined with

the uses to which they are put and the socio-political connotations they bear

Baker and Stein (1977) scholars studying language use in Mauritius have

found that English is associated with knowledge French with culture

Creole with egalitarianism and other languages ancestral heritage

Consequently although Creole is the most widely spoken language in the

country French predominates in the media and English is the official

language of government and school instruction (Stein and Baker 1977)

According to the 1983 census the top five languages were Creole 541

Bhojpuri 204 Hindi 115 percen French 37 and Tamil 37 These

figures indicate the principal language used in the home Most Mauritians

however speak several languages

Literature suggests that global organizational structures need to adopt

common rules and procedures in order to have a common bdquolanguage‟ for

communicating across cultural borders (Kostova 1999 Kostova and Roth

2003 Gupta and Govindarajan 2000) This is directly reflected by the results

above that foreign investors need not to learn the local language of locals but

its important to create a common language within the organisation that is

59

understood by all stakeholders in the organisation for effective and efficient

communication

45 Religion

The study found that main religions in Mauritius are Hindu Muslim and

Christianity to a lesser extent Hindus make up approximately half of

religiously affiliated Mauritians Of the remaining Mauritians approximately a

third are Christians and about 15 Muslim followed by small Buddhist and

Sikh communities It is therefore imperative that a foreign investor considers

religion of the people of Mauritius before setting up a business Religion

The study also found out that various religions found on Mauritius tend to play

a major part in the islands cultural events and churches temples and

mosques are to be found everywhere Hindu and Tamil celebrations are part

of Mauritian cultural life

ldquohellipFestivals such as Divali (the festival of lights) Holi (in which participants

are covered in colourful powders) and Thai Poosam in which Tamil devotees

pierce their bodies with masses of needles as an act of penance are

popularly attended by Mauritianshelliprdquo [Participant A60]

ldquohelliphellipthere are also a number of diverse practices and superstitions

originating in beliefs brought from Africa and Asia Local sorcerers known as

longanistes or traiteurs are sometimes called in to settle arguments exact

revenge or administer love potionshelliphelliprdquo [Participant B41]

60

However all communities live together in harmony with each other regardless

of religion the study learnt

hellipHarmonious separatism is how we characterise our communal relations

in Mauritiushellip [Participant A13]

Since all citizens are ldquodescendants of slavery there are no tribes unlike

other African countries This has made integration and assimilation easier and

it makes it very easy for any SME to adapt to the local conditions due to pre

existing harmonyrdquohellip [Participant A13]

It is worth noting that businesses remain closed in public religious days but

the purchasing power remains the same regardless of whether it‟s a public

holiday or not

ldquohellipthe demand is not dependent on whether itrsquos a holiday or nothelliprdquo

[Participant A11]

ldquohellipit doesnrsquot matter really whether its holiday or religious holidayhelliprdquo

[Participant A21]

According to Stein and Baker (1977) the Mauritian society is noteworthy for

its high degree of religious tolerance Mauritians often share in the

observances of religious groups other than their own In part as a result of the

multiplicity of religions Mauritius has more than twenty national holidays In

addition the government grants subsidies to all major religious groups

61

according to their membership (Stein and Baker 1977)This is also evident

from the results of the research

Ethnicity religion and language have been important factors in shaping the

way Mauritians relate to each other in the political and social spheres Despite

the fact that sectarian factors are less of a determining factor in peoples

social and political behaviour they remain an important clue to the peoples

past and self-identity (Rassool 2001) As a foreign investor understanding

the religious belies of a society and taking all the necessary details in to

consideration play a major role in an international business environment

setting (Hosftede 1980) For example observing religious holiday and making

sure employees get days off and annual leaves on such important days

having prayer rooms for those willing to pray at work and creating a non-

discriminatory environment for all employees

It is worth mentioning that while religion does not have a direct impact on

Mauritius investment since it an international business hub However it is

important for investors to take note of all the aspects of religion since it plays a

very important role in lives of the Mauritians For example there are religious

holidays as an employer it is important to follow the religious holiday calendar

and give annual leaves to employees on such important days

46 Social Life

For the interest of prospective investors the study found that the social life in

Mauritius is very much close to families and friends People all meet at open

markets for normal shopping and socialise over weekends ldquoeven ministers

62

managing directors of big companies go to open marketsrdquo [Participant

A12]

There is no busy night life in the country as well as cinema and theatres

because most people prefer home video entertainment ldquoMost people found at

social places like cinemas pubs clubs etc are employees and not

employersrdquohelliphellip [Participant A12] Prospective investors should therefore

know that they are likely to meet business associates at board rooms or at

their offices rather than at social centres

In a society where tolerance is a national virtue and ethnic conflicts are

invisible to the casual visitor it takes time to learn the dos and donts of

socialising ldquohelliphere in Mauritius you must realize that we walk on eggs

continuouslyhelliprdquo [Participant B36] For a peaceful and tolerant as Mauritius

undoubtedly is the diverse groups populating the island do not collectively

make up a nation Mauritius like any other island is a nation of nations and

compromise is the order of the day be it in politics in the economy in the

media or at a dinner party the study found

The study found out that unlike other African societies Mauritius people would

prefer to stay at home and watch movies play video games with kids or visit

friends and relatives to socialise or for a night out There are not many social

night clubs in Mauritius as compared to the United Kingdom ldquohellipmany homes

today have a Digital Video Decoders (DVD) sets and donrsquot see the importance

of going out to cinemas and would helliphelliphelliprdquo [Participant A12]

63

This does not come as a surprise since literature suggests that Mauritius

though it is multicultural society and an international hub for business there

are a quiet peaceful and tolerant nation and would prefer to keep their space

(Stein and Baker 1977)

47 Market Accessibility

The study found that as first foreign investor Mauritius government has open

market programme When the free operational zone initiative began investors

imported raw materials imported duty free and foreign companies had to

show transformation of raw materials into fished exports since the

government‟s aim was to increase exports thus improve balance of trade

However in the early stages the initiative did not work as expected because

of certain barriers

Lack of adequate government incentives to lure more investors

Too much repetition meaning most of the companies where doing the

same thing

Lack of skilled human resources

The scenario is summarised by participant B3 in the following

statementldquohelliphellipour people did not have culture of businessrdquo

For more access to the markets further initiatives were put into place The

government assured investors of freedom of capital movement that is the

investors were guaranteed that they would bring their money into and out of

the country whenever they felt like doing so In addition the government

64

embarked on providing more facilities (industrial buildings) and infrastructures

all over the country opening up rural areas because towns already had

infrastructures Lastly first time investors were provided with free access to

customs thus maintaining the earlier option of tax free imports

While Mauritius was doing all these events elsewhere in the world played to

their favour European Union and USA were imposing import quotas on

Chinese and Indian imports to prevent damping So these investors had to

look for alternative markets and Mauritius turned out to be one of such

markets But the government had to act quickly to avoid bdquotransit investors‟

ldquohellipthey are investors who want to do business when it favours them but when

they begin to loose certain privileges or profits get diminished then they take

offrdquohelliphellip [Participant B3]

To avoid this foreign investors were made to transfer skills and knowledge to

local community which led to emergence of Mauritius community of

manufacturing

ldquowho started from easy stitching like socks pyjamas bras etc and later

upgraded to big Mauritius labelshelliprdquo [Participant B3]

The study further found that the initiative did not stop there The government

further established Mauritius Enterprise Development Investment Authority

(MEDIA) in 1985 which took lead in looking for prospective investors from

65

Europe USA Hong Kong and India among others Any willing investor was

transported to Mauritius and accommodated freely on government accounts to

tour the country and carry out investment feasibility studies This helped to

popularise the investment opportunities in Mauritius and attracted many more

investors Currently MEDIA has been transformed into Mauritius Board of

Investment which is no longer in charge of managing industries but

ldquopromotes Mauritius businesses abroad and participates in trade fairs to

further open uprdquo [participant B3]

The study also found out that there are specific niche markets for foreign

investment in Mauritius namely the Offshore Industry the Financial Industry

the Construction and Tourism especially in the area of high class luxury

property market in form of villas hotels and apartments and of recent the

Information Technology (IT) industry These industries cover a large spectrum

including SMEs

ldquohellipone of these sectors makes a very good investment for any investor

especially the construction industryhelliprdquo [Participant A89]

The results agree with Putz (2000) which notes that niche markets make

establishing a business by immigrants easier because the immigrants needs

for consumer goods create a specific demand This is evidence by all the

incentive the Mauritian government have put in order to attract foreign

investors in to country for the benefit of the Mauritian population Furthermore

Putz (2000) emphasise the opportunities offered by the host country including

66

access to the market and job market conditions as important factors for

international business

48 The role of ICT to SME business in Mauritius

The study found that Mauritius has a very well established ICT sector It has

formed the backbone of SME success in Mauritius As early as 1990 the

country provided hellip ldquothe fastest broadband in the world to help SME business

investors who were each allocated free 2MB internet accessrdquohellip[Participant

A 23] Recently the government has in turn invested a lot of money in

developing a cyber city a few kilometres away from the capital Port Louis

which will form the hub for future investments

This high level of ICT development in the country has created SME in areas

such as offshore financial services calls centres and enhanced tourism

industry growth Any prospective investors are guaranteed of highly

developed ICT backed up by highly qualified local human resources The

offshore investment sector has even been further boosted byhellipldquobilateral

agreements with India allowing companies registered in Mauritius to transfer

funds to India tax freerdquohellip[participant B13]

It is hoped that in helliprdquo5 years time the whole island will have free wifi

connectivityrdquo participant B33 The country not only makes use of its advanced

ICT sector but has become a big player in the region as well For example

Mauritius state informatics computerised South African government in 1996 It

has also won other computerisation contracts in Zambia Zimbabwe Namibia

Kenya and Ghana To sustain such success ldquopartnerships have been formed

67

with global players such as Microsoft to provide training not just to Mauritius

nationals but other scholars from the South Eastern Africa region as

wellrdquohellip[participant B13]As matter of fact the government of Mauritius has

invested billions in building s cyber-city a few miles aware from the capital

Port Louis

ldquoits opening in July this year and it is expected to be the centre of attraction

for investorsrdquo [Participant B13]

ldquoactually the government invested in this cyber-city with the intention to

attract European and American investorsrdquo [Participant A6]

From these results there is evidence that technology plays a major role in

SME development Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

68

48 Governance and the role of women in SME sector

in Mauritius

Mauritius is a multicultural country with ldquo70 of the population of Chinese

Indian ancestry 2 white French origin and the remaining mixed race ndash

creolesrdquo [participant A17] Europe has not have a lot if cultural influence on the

country and predominant cultures are Asian African cultures Study found

that common folklore popular songs in Mauritius would also be ordinary

found on other African countries such as Senegal Mozambique Cameroon

and Sierra Leone among others signifying deep rooted African traditions

The government maintains ndash discrimination laws for either gender In the early

stages of SME development women provided the bulk of the labour in the

rural areas as industries moved away from cities into the rural areas There

are concerted efforts to get women into jobs especially leadership roles

ldquowomen themselves are too slow to act and take advantage of the

government incentivesrdquo

The study found out that woman in Mauritius do not occupy positions of

strategic power decision making This is not a surprise because it is the same

with most Southern African countries The government of Mauritius has put a

lot of structures to support women in business but women are taking it slow to

utilize these structures

69

There are many government agencies and organizations headed by women

and even cabinet posts but most women would rather stay out of politics

becausehelliphellipldquopolitics can get very dirty involving personal lives of politicians

which men donrsquot mind but women do mind a lot aboutrdquohellip[participant A 17)

However in other sectors like education and healthcare there are many

women represented in the labour force

The study also found out that just like any other society one can not ldquohellipstop

some kind of abuse for both males and females There are cases of both

female and male harassment but the law comes in to protect such victims

There are also cases of petty crime and rape involving women either as

perpetrators or victimsrdquohellip [Participant A13]

According to AllAfrica Global Media (2008) the winds of change are blowing

across the island of Mauritius and many men in this traditionally conservative

nation are working hand in hand with women to see that the common sense of

gender equality prevails The absence of women at the decision-making table

usually means the absence of their priorities and needs Irrespective of the

Southern African Develoment Community (SADC) Declaration there are so

few women in politics This is evident from the results of the study which found

that women will rather do health jobs and education than to play the dirty

tricks of politics

Women councillors make up a mere 37 in the Moka-Flacq District Council

This is the lowest figure not only in Mauritius but also in the SADC region

70

This is far from the 2005 30 target not to mention the 50 goal now being

set for the region and included the draft Protocol on Gender and Development

up for review at the August SADC Heads of State Summit ( AllAfrica Global

Media 2008)The results found out that there is also a few representations of

women in business Women do mostly the dirty jobs of caring for children and

their families and do not have the courage to enter the business sector This is

not surprising especially in the SADC region women play the minority role

and are rarely represented at the strategic decision making level hence their

needs are always neglected resulting in women poverty

49 Challenges faced by the country and hence SME investors

Stiff competition from other countries such ashelliphellipldquoBotswana Vietnam and

South East Asia in the textile industry due to cheap labour Maldives and the

Caribbean Islands for tourism difficult in Training enough qualified personnel

in ICT to cope with demand International competition and access to fundsrdquo

hellip[participant B13]

To face these challenges the study found that the country has expanded

tertiary education and formed partnerships with foreign universities such as

ldquoFrench Scientific University which has been running Medical school in

Mauritius for 10 years By the time of this study an agreement had been

reached by Thames valley university (UK) to open up campus in

Mauritiusrdquohellip[participant B15] The aim of the government is to offer high

quality education to students from the region as well as far away like China at

affordable cost and to compete with European universities Further to

71

educational development the study also found out that the country is striving

to create partnerships with ldquoresearch organisations and to create high quality

healthcare so as to benefit from health tourism where would just travel to the

country to get affordable high quality specialised health carerdquohelliphellip [Participant

A3]

Finally results show that there is stiff competition from different sectors of

business and other force which needs to be taken into consideration when

doing business internationally Globalization tends to redistribute economic

rewards in a non-uniform manner a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) It essential to know all

the factors surrounding the business sector and understanding all the

business practices before investing to avoid any loss

72

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

Research on culture and IB is definitely a bdquogrowth‟ area because the business

world is in many ways becoming one The researcher concluded the following

based on study findings

Firstly the cultural diversity and harmony of the island make Mauritius a

unique place in the world It is also known for its social peace political stability

and racial harmony Its steady economic growth over the years coupled with

its nation‟s social cohesion and prosperity ensure continuing development

Secondly Mauritius enjoys a literacy rate over 80 percent Skilled labour

graduates and qualified professional including lawyers engineers IT

programmers consultants accountants and chartered secretaries are

available to suit virtually all business needs in two international languages

English and French Language is therefore not a barrier to foreign investment

In addition academic training at the University of Mauritius and the newly

established University of Technology a comprehensive system of vocational

training through the Industrial and Vocational Training Board (IVTB) ensures a

ready supply of skills in a number of fields such as tourism engineering

electronics jewellery ICT printing and textiles

Thirdly In view of the importance of foreign investment as a source of

sustenance to economic growth the government of Mauritius has taken a

series of policy measures to encourage its flows into manufacturing offshore

73

banking and financial services information technology communication and

tourism As far as foreign investors are concerned Mauritius offers itself as an

attractive destination because several positive features such as political

stability availability of skilled labour and investment-friendly rules and

institutions

Fourthly after a sustained growth path over the last three decades based on

sugar textiles and tourism Mauritius is now shifting gears to move towards a

higher stage of economic development so as to consolidate its position as a

premier international hub Foreign Direct Investment (FDI) has played an

important role in the development of Mauritius and will again be decisive when

the country embarks on high value-added capital intensive and knowledge-

based activities

Fifthly the government plays the role of a facilitator and has endeavoured at

all times to create the most conducive investment environment by enacting

appropriate legislations building state-of-the-art infrastructure investing in

human capital and introducing packages of investment incentives for the

manufacturing financial services and ICT sectors so as to enhance the image

of Mauritius

In this respect the Board of Investment (BOI) is the first contact point for

anyone investing in Mauritius Operating under the aegis of the Ministry of

Finance the BOI was established in March 2001 under the Investment

74

Promotion Act to give a new impetus to foreign direct investment The BOI is

the apex organization for the promotion and facilitation of investment in

Mauritius The primary role of BOI is to stimulate the development expansion

and growth of the economy by promoting Mauritius as a competing business

and service centre It aims at streamlining the legal framework and to make

better provision for the promotion and facilitation of investments in Mauritius It

acts as a facilitator and provides a one-stop shop service to both local and

foreign investors ensuring reliable and speedy processing of applications The

BOI receives processes and approves all applications for investing in

Mauritius It also assists investors in obtaining the necessary secondary

permits and clearances from relevant authorities thus ensuring a speedy

implementation project

Six Mauritius pursues a liberal investment policy and actively encourages

foreign direct investment in all sectors of the economy Attractive packages of

both fiscal and non-fiscal incentives tailor-made to the needs of each priority

area of development are offered to investors Excellent opportunities for

investment in Mauritius exist in various sectors of the economy including

manufacturing information technology knowledge industry regional

headquarters tourism and leisure financial services Freeport activities

amongst other sectors Some of the priority areas are in Information and

Communication Technology which is set to a play a lead role in the economic

development of the country in the medium and long terms The availability of

high bandwidth connectivity (with SAFE Project and international Gateways)

at near global parity in quality and tariff on the one hand and the setting up of

75

dedicated IT habitats including the Cyber city at Ebeacutene on the other hand

plus total Government support to this industry are testimony of the importance

of this industry to Mauritius Others include the manufacturing sector textiles

and apparel the spinning sector electronics and light engineering medicals

and pharmaceuticals agro-business leather products and jewellery and

watches

The export-oriented manufacturing sector has been the backbone of the

Mauritian economy for the past three decades This sector remains a major

constituent of the Mauritian economy in terms of foreign exchange earnings

employment and contribution to GDP and is called upon to continue to play

an important role in the consolidation and diversification of the industrial base

of the country certain

Lastly some incentives provided by government to foreign investors In the

manufacturing sector these include among others

No customs or duty or sales tax on raw materials and equipment

No tax on dividends

No capital gains tax

Free repatriation of profits dividends and capital

50 relief on personal income tax for expatriate staff

New incentives for the ICT Sector consist inter alia of

the availability of tax holiday up to year 2008 for specified

pioneering high-skills ICT operators typically geared towards the

export market such as software development multi-media and to

high-level ICT training institutions

76

customs duty-free import of ICT and similar equipment

50 relief of personal income tax for a specified number of foreign IT

staff

duty-free import of personal belongings of foreign IT staff

effective fast track procedure for procession of visa and work

permits for foreign staff including spouses

From the above the research concludes that Mauritius being a multicultural

society as it is the culture they share does not have a direct impact on

investment in Mauritius because of it is an international hub for business It is

also expected that from the results the situation is not going to change after

time but will keep in this shape for a long since it is the government incentive

to attract more investors into the country However there are certain aspect of

culture eg believes that foreign investors need to understand and take into

consideration This study recommends any prospective investor to make good

investment in to Mauritius without fear

77

CHAPTER SIX

REFLECTIONS FROM THE STUDY

The views derived from this study might not be directly applicable to the whole

region because of variations in socioeconomic settings in various parts of the

Mauritius Also views expressed in this study were obtained mainly from

urban based managers and respondents and might not be similar to rural

based SMEs from the same community or area

Some scholars might not support the sampling techniques used but they

were the most practicable given the circumstances

Legal practitioners in Mauritius were supposed to be part of the sample but

they were hard to reach with some declining to participate

Demographically and geographically the sites were larger than anticipated

given the time and resources available for the study

Lastly the study was limited to the previous 20 years which might have

yielded same generational trend missing the opportunity to get data across

various generations within the sites

78

CHAPTER SEVEN

FUTURE RESEARCH

With more funding and resources a similar study could be conducted

throughout a wider geographic region and encompassing all categories of

SMEs micro small and medium Furthermore with more time a greater

number of interviews could be conducted which would provide richer data that

would be more in depth for conclusive analyses to be made Additionally

participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

79

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

WORD COUNT 16 969

80

APPENDICES APPENDIX 1 MauritiusData Profile

2000 2005 2006

World view

Population total (millions) 119 124 125

Population growth (annual ) 10 08 08

Surface area (sq km) (thousands) 20 20 20

Poverty headcount ratio at national poverty line ( of population)

GNI Atlas method (current US$) (billions) 444 653 681

GNI per capita Atlas method (current US$) 3740 5250 5430

GNI PPP (current international $) (billions) 891 1239 1334

GNI per capita PPP (current international $) 7510 9970 10640

People

Income share held by lowest 20

Life expectancy at birth total (years) 72 73 73

Fertility rate total (births per woman) 20 20 20

Adolescent fertility rate (births per 1000 women ages 15-19) 39 40 41

Contraceptive prevalence ( of women ages 15-49)

Births attended by skilled health staff ( of total) 100 99

Mortality rate under-5 (per 1000) 18 15 14

Malnutrition prevalence weight for age ( of children under 5)

Immunization measles ( of children ages 12-23 months) 84 98 99

Primary completion rate total ( of relevant age group) 105 97 92

Ratio of girls to boys in primary and secondary education () 98 100 103

Prevalence of HIV total ( of population ages 15-49) 06

Environment

Forest area (sq km) (thousands) 04 04

Agricultural land ( of land area) 557 557

Annual freshwater withdrawals total ( of internal resources)

Improved water source ( of population with access) 100

Improved sanitation facilities urban ( of urban population with access) 95

Energy use (kg of oil equivalent per capita)

CO2 emissions (metric tons per capita) 23

Electric power consumption (kWh per capita)

Economy

GDP (current US$) (billions) 447 629 635

GDP growth (annual ) 40 46 35

Inflation GDP deflator (annual ) 37 48 41

Agriculture value added ( of GDP) 6 6 6

Industry value added ( of GDP) 31 28 27

Services etc value added ( of GDP) 63 66 68

Exports of goods and services ( of GDP) 63 57 60

Imports of goods and services ( of GDP) 65 61 67

Gross capital formation ( of GDP) 26 23 25

Revenue excluding grants ( of GDP) 220 214 215

Cash surplusdeficit ( of GDP) -11 -21 -30

States and markets

Time required to start a business (days) 46 46

Market capitalization of listed companies ( of GDP) 298 416 567

Military expenditure ( of GDP) 02 02

Fixed line and mobile phone subscribers (per 100 people) 39 82 90

Internet users (per 100 people) 73 241 145

Roads paved ( of total roads) 97

High-technology exports ( of manufactured exports) 1 2 24

Global links

Merchandise trade ( of GDP) 82 84 91

Net barter terms of trade (2000 = 100) 100 109 115

External debt total (DOD current US$) (millions) 1713 2153 1997

Short-term debt outstanding (DOD current US$) (millions) 767 1363 1363

Total debt service ( of exports of goods services and income) 181 72 71

Foreign direct investment net inflows (BoP current US$) (millions) 266 39 107

Workers remittances and compensation of employees received (US$) (millions)

177 215 215

Official development assistance and official aid (current US$) (millions) 20 34 19

Source World Development Indicators database April 2008

81

APPENDIX 2

SUMMARY GENDER PROFILE (Mauritius)

Mauritius

Sub-Saharan Africa

Upper middle income

1980 1990 2000 2004 1980 2004 1980 2004

GNP per capita (US$) 1210 2300 3690 4640 652 601 2391 4769

Population

Total (millions) 10 11 12 12 3850 7258 4394 5762

Female ( of total) 507 501 502 503 503 501 515 514

Life expectancy at birth (years)

Male 63 66 68 69 47 46 63 66

Female 69 73 75 76 50 47 71 73

Adult literacy rate ( of people aged 15+)

Male 848 884 954

Female 750 805 942

LABOR FORCE PARTICIPATION

Total labor force (millions) 0 0 1 1 157 299 193 256

Labor force female ( of total labor force)

37 34 34 35 43 42 42 41

Unemployment

Total ( of total labor force)

33 88 102 12

Female ( of female labor force)

36 96 126 134

EDUCATION ACCESS AND ATTAINMENT

Net primary school enrollment rate

Male 91 96 94 68

Female 92 97 96 60

Progression to grade 5 ( of cohort)

Male 97 99

Female 98 99

Primary completion rates ( of relevant age group)

Male 61 105 98 66 95

Female 63 104 102 56 96

Youth literacy Rate ( of people aged 15-24)

Male 912 937 978

Female 911 954 974

HEALTH

Total fertility rate (births per woman)

27 23 20 20 67 53 31 20

Contraceptive prevalence ( of women aged 15-49)

75 26 76 22 69

95

82

APPENDIX 3

DATA COLLECTION FORM FOR THE SURVEY Sitehelliphelliphelliphelliphellip Participant numberhelliphelliphelliphellip MANAGING DIRECTOR CEO MANAGER

Age group -25 26 ndash 35 36 - 45 46-55 56-64 65+

Education Nursery ndash Standard 4

Std 5 ndash 7 (8) Form 1 ndash 2

Form 3 ndash 4 or A level

College University

Employment Yes No Business (what type)

Partnership Whole Citizen

Joint Venture

Age of Company

1-3 years 4-6 years 7-10 years

11-15 Above 15yrs

Number of Employees

10-25 50-99 100-149 150-200

Place of birth

In the constituency

Outside the constituency

Where

Residence Rural Urban Where

Before starting business

After business

Children

Boys Number

Girls Number

Any born a Yes None

Are they in school

Yes No Some

Working Yes No Some

Annual Sales

Balance Sheet

Less than R1000000

R101 000- 250 000

R251 000- 15 million

R 15 million +

Years Employed as CEO

0-3 4-7 8-14 15-19 Over 20 years

83

APPENDIX 4 Qualitative data questionnaire The following questions were used as a guide during the focus group discussions However they were not followed in the strict order or wording as they appear here

SOCIAL INCLUSION EXCLUSION

I am going to ask you questions regarding support you think the society could give foreign investors There is no right or wrong answers it is just about your opinion

a) How do you feel about foreign investors coming to Mauritius

b) How has your friendship with foreign business before and after they arrive in Mauritius

c) Do you keep in touch with foreign businesses around you and prospective investors

d) In your opinion how does foreign business feel about Mauritius

e) Are foreign businesses doing well or badly

f) What support structures or government incentives are there for foreign investors

g) What kind of support would you like to receive from the government

BUSINESS ATTITUDE AND BELIEFS

I am now going to ask you some general questions about business and your opinions about it

a) How would you describe the general business environment

b) Do you find it difficult to do business with people from different countries of the world Why

c) What do you believe the first thing to do on the morning before opening

your business (Local people) Why

d) How best can the Mauritius people be motivated into business How do you get over them

84

e) What areas do local people consider as niche areas for foreign

business

f) How do local people organize their business Why

g) As a local business person what would you consider as abomination of business in Mauritius Why

h) What is the role of women in the business sector

CULTURE

I am now going to ask you questions about the your culture

a) What are your views about business culture in Port Louis

b) What are the challenges of national culture on business practices in your opinion

c) What are the benefits of culture on business practice

d) Do you think foreign investors need to know the local language when investing in Mauritius

e) If you were to advice a foreign investor what would you want them to know about Mauritius

f) How do you think the family daily practice influences business in

Mauritius

g) What business actions of behaviors are sensitive to the local people

h) How best can foreign investors assimilate with the local business people

i) What do local people like to buy on weekends week days public religious holidays

j) What marketing strategies violet the culture of Mauritius ndashwomen naked Eating behavior Etc

85

APPENDIX 5

Introductory letter consent form

TITLE CULTURE AND INTERNATIONAL BUSINESS

ENTREPRENUERSHIP A CASE STUDY OF MAURITIUS

INTRODUCTION

I am Angelinah Boniface a student pursuing Masters of Science in

Information Systems the University of Sheffield United Kingdom I am

conducting a study on the Impact of culture on small and medium

enterprises for my dissertation The study is expected to last 3 months and a

report of the findings will be availed to all interested stakeholders including the

university as part of course requirements

PURPOSE OF THE STUDY

This study is intended to gain insight into views and opinions about

widowhood and inheritance in relation to health and well being of participants

and the community at large Evidence from this study may be useful in future

government and development agencies‟ planning and provision of relevant

interventions for the benefit of the whole community

VOLUNTARINESS AND CONFIDENTIALITY

Your participation in this study is purely voluntary and you can withdraw

at any time should you feel uncomfortable to proceed Information obtained

from this study will be used for no any other purpose other than the

dissertation It will be kept confidential only accessible to the researcher and

pseudonyms will be used to ensure anonymity and confidentiality of

participants and location The researcher will strive to treat all participants

with dignity respect equality and minimise possible harm that might arise

from the study

Agreeing to take part in this study will be treated as your consent to be

involved in this research BUT YOU HAVE THE RIGHT TO WITHDRAW

THE CONSENT

86

RISKS AND BENEFITS

There are no risks to the questions that will be asked If at any point you feel

uncomfortable to answer any question please feel free to ignore such to avoid

any harm

There is likely to be no immediate benefits to you as a participant However

the information obtained in this study will go a long way in informing the

younger generation and wider audience about the culture It might also be

used by the government and other development agencies to plan for

interventions relevant to the needs of widows in your community in the future

based on the evidence you have provided in this study

CONTACTS

The researcher can be contacted at +44 0791263163 lip07acbshefacuk

or linabonyahoocom in case of any questions issues

In case of any problems that need university attention my supervisor can be

contacted at kalbrightshefacuk

PLEASE DONrsquoT TAKE PART IN THIS STUDY IF YOU ARE BELOW 18

YEARS OF AGE

Thank you very much for your anticipated cooperation

Researcher‟s signature Participant‟s signature

helliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

87

REFERENCES

Bhagat RSet al (2002) Cultural variations in the cross-border transfer of

organizational knowledge an integrative framework Academy of

Management Review 27(2) 204ndash221

Boyacigiller NA amp Adler NJ (1991) ldquoThe parochial dinosaur organizational

science in a global contextrdquo Academy of Management Review 16(2) 262ndash

290

Bowling A (ed) (2002) Research methods in health Investigating health and

health services Buckingham Open University press

Dabee R and Greenway D (2001)The Mauritian Economy A Reader

PalgraveNew York

Dawson C D (2002) Practical research methods A user friendly guide to

mastering research techniques and projects Oxford How to Books Ltd

Denscombe M (ed) (2007) The good research guide for small scale social

research projects Berkshire Open University Press

Denscombe M(ed) (2003) The good research guide For small scale social

research projects Maidenhead Open University Press

Economic And Social Research Council (2005) ESRC research ethics

framework [online]

httpwwwesrcsocietytodayacukESRCInfoCentreopportunitiesresearch5

Fethics5Fframework [ Accessed May 05 2008]

88

Gilbert N (ed) (2001) Researching social life London Sage Publishers

Grbich C (1999) Qualitative research in health An introduction London

Sage publications

Hunter D amp Lang T (1993) The Leeds declaration Leeds Nuffield Institute

for Health

Neuman L W(ed) (2000) Social research methods qualitative and

quantitative approaches Needham Heights MA Allyn amp Bacon

Maynard M amp Purvis J (1994) Researching womens lives from a feminist

perspective London Taylor and Francis group

Muuka GN (2002) Africas informal sector matters a challenge to scholars

to close the knowledge gap Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

Business and Development International Conference Port Elizabeth April 3-

6 pp1-6

Southwood R (2004)The impact of ICT on SMEs ndash a motor for future

economic growth in hard-pressed times [Online] Balancing Act news update

wwwbalancingact-africacomnewscurrent1html [Accessed 26 January

2008]

Machacha L (2002) Impact of information technology on small and medium

enterprises (SMEs) in Botswana Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

89

Business and Development International Conference Port Elizabeth April 3-

6 pp277-82

Organisation for Economic Co-operation and Development (OECD)

(2000)OECD study highlights role of small and medium enterprises in job

creation Organisation for Economic Co-operation and Development

[Online]wwwoecdorgmediapublishpb00-11ahtm [Accessed 8 July 2008]

Commonwealth Secretariat UK (2006) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius London Commonwealth

Secretariat

Reed DM (1998) Using the Business Excellence Model in Small Service

Business British Quality Foundation

Taylor AW amp Adair RG (1994) ldquoEvolution of Quality awards and self

assessment practices in Europe a case for considering organisation sizerdquo

Total quality Management 5 (4) 227-237

United Nations (1993) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

Johanson J amp Wiedersheim-Paul F (1995) The Internationalization of the

Firm - Four Swedish Cases Journal of Management Studies 20 (3) 123-139

90

Chui ACW Lloyd AE and Kwok CCY (2002) The determination of

capital structure is national culture a missing piece to the puzzlerdquo Journal of

International Business Studies 33(1) 99ndash127

Earley PC amp Gibson CB (2002) Multinational Teams A New Perspective

Lawrence Earlbaum and Associates Mahwah NJ

Gibson CB (1999) ldquoDo they do what they believe they can Group-efficacy

beliefs and group performance across tasks and culturesrdquo Academy of

Management Journal 42(2) 138ndash152

Hofstede G (1980) Cultures Consequences International Differences in

Work-Related Values Sage Newbury Park CA

SMIDO (2006)A new Vision For SMEs Development Mauritius

Government Printer Port Louis

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Stone A (1997) SMEs and Technology why should we make special efforts

to help World Bank

Bhagat RS et al (2003) Knowledge in Cross-Cultural Management in Era

of Globalization Where Do we Go from Here in D Tjosvold and K Leung

91

(eds) Cross-Cultural Management Foundations and Future Ashgate Englan

155ndash176

Cairncross F (2001) The Death of Distance Harvard Business School Press

Boston MA

Commonwealth Secretariat UK (2005) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius Commonwealth Secretariat

Drucker PF (1995) Managing in a Time of Great Change Truman Talley

BooksDutton New York

Guilleacuten M (2001) ldquoIs globalization civilizing destructive or feeble A critique

of five key debates in the social science literaturerdquo Annual Review of

Sociology 27 235ndash260

Gibson CB and Cohen SG (2003) Virtual Teams that Work Creating

Conditions for Virtual Team Effectiveness Jossey-Bass San Francisco

Grazol P et al(2004) ldquoThe Effect of Culture on IT Diffusion Email and Fax in

Japan and the US Information Systems Researchrdquo Journal of International

Consumer Marketing 16 4 pp 29-64

Greider W (1997) One World Ready or Not Crown Business New York

92

Gertler MS (1997) The Invention of Regional Culture In Lee R and Willis J

eds Geographies of Economies London Arnold

Govindarajan V and Gupta AK (2001) The Quest for Global Dominance

Transforming Global Presence into Global Competitive Advantage Jossey-

Bass San Francisco

Haire M et al(1966)Managerial Thinking An International Study Wiley

New York

Heuer M et al(1999) Cultural stability or change among managers in

Indonesia Journal of International Business Studies 30(3) 599ndash610

Hofstede G (1997) Cultures and Organizations Software of the Mind New

York McGraw-Hill

Hofstede GH (2001) Cultures Consequences Comparing Values

Behaviors Institutions and Organizations Across Nations London Sage

Publications

Hoecklin L (1995)Embedded Autonomy States and Industrial

Transformation Princeton NJ Princeton University Press

93

IBP USA (2002) Mauritius Investment and Business Guide IB Tauris and Co

LTD London

Kerr C et al (1960) Industrialism and Industrial Man Harvard University

Press Cambridge MA

Kirkman BL amp Shapiro DL (2000) ldquoUnderstanding why team members

won‟t share an examination of factors related to employee receptivity to team-

based rewardsrdquo Small Group Research 31(2) 175ndash209

Lisenda L (2003) Small and medium-scale enterprises in Botswana their

characteristics sources of finance and problems BIDPA Gaborone

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Meredith GG (ed) (2004) Small Business Management in Australia

McGraw-Hill Sydney

Mistry PS (1999) ldquoCommentary Mauritius ndash quo vadisrdquo African Affairs 98

(393) 551ndash69

Mullins LJ(ed) (1999) Management and Organizational Behavior 5th ed

London Financial Times Pitman

94

Myers MDamp Tan FB (2002) ldquoBeyond Models of National Culture in

Information Systems Researchrdquo Journal of Global Information Management

10 (1) 112-134

Putz R (2000) ldquoCulture and entrepreneurship views from the middle and

lower level managersrdquo Journal of Business Ethics 22 145- 153

Scottish Economic Statistics Scottish ExecutiveONS IDBR (2005)Size

Analysis of Welsh Business SDR 692004Statistical Press Release URN

0440

Straub D et al (2002) rdquoTowards A Theory-Based Measurement of Culture

Journal of Global Information managementrdquo 10 (1)

Schaeffer RK (2003) Understanding Globalization The Social

Consequences of Political Economic and Environmental Change Rowman amp

Littlefield Lanham MD

SMIDOA new Vision For SMEs Development(May 1996)

SMME Task Force Report (1998) Small medium and micro-enterprises task

fore force report Government Printer Ministry of Commerce and Industry

Sondergaard M amp Hofstede G (1994) ldquoA study of Reviews Citations and

Replicationsrdquo Organization Studies 15 (3) 447-456

95

Schein EH (1992) Organizational Culture and Leadership Jossey-Bass

San Francisco

Stone A ( 1997) SMEs and Technology why should we make special efforts

to help (World Bank 1997)

Statistical Press Release (2005) URN 0592 Office for National Statistics

Weisinger JYamp Trauth EM (2002) ldquoSituating Culture in the Global

Information Sectorrdquo Information Technology amp People 15 (4) 306-320

United Nations (2005) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

iv

DEDICATIONS

To my father Shadreck Boniface who passed on before I could give back all

the good things you did in my life you will always be remembered by me for

the gap you left in my life no one can replace may his soul rest in peace To

my mother in recognition of your worth for all the support you gave A feeling

bears on itself the scars of its birth it recollects as a subjective emotion its

struggle for existence it retains the impress of what might have been but is

not and hope if the fool would persist in his folly he would become wise To

my daughter and to all my family and friends this is for you

THE BOTSWANA FLAG

The Botswana flag was officially adopted on September 30 1966

The colours on the flag correspond to those on the national coat of arms The

blue represents water the white-black-white bands depict the racial harmony

of the people as well as the pluralist nature of the society They are inspired

by the coat of the zebra the national animal

v

This report is dedicated to all those who spend their daily lives trying to cope

with the challenges of HIVAIDS and all those who are affected by this

disease and to the new AIDS free generation

ACKNOWLEDGEMENTS

My sincere gratitude to all whose knowledge skills experience and support

went into this work First are the authors of various literatures whose work

guided this dissertation Overly important too are all those participants who

offered their resources and business experiences which has influenced the

outcome of this paper

To the University of Sheffield thanks for the opportunity to pursue this course

at your institution and the experts you provided to teach various aspects of the

course A lot of thanks to the course leader and my supervisor Dr Kendra

Albright for all the guidance and motivation she provided during the entire

programme Moreover for the opportunity she gave me to pursue this

research Thanks too to the rest of the tutors especially Dr Barry Eaglestone

who refined my research knowledge and skills Special thanks go to my

sponsor The Commonwealth Scholarship for providing funds for me to purse

my programme To my Administrator Dr Fiona Groccut and Sarah Ferdecio

thank you for the fast response you would give whenever I needed your help

A special thank you to Richard Campos the Managing Director for

RCBusiness Support Ltd for the support you throughout this project

I could not do without the invaluable family support from my sister Juliet

Shadreck and my mom Monica Boniface thank you mum Particular thanks

to Theo my daughter who I left at a tender age to come and pursue this

vi

course To Gobonaone Keaosenya thanks for your moral and emotional

support you gave during my studies To my family Lebo Kay Goitse Kgosi

Monica Jullie Douglas and all other friends not mentioned thanks for your

moral support Thanks to my family for their prayers and support

Thanks too to all my MSc in Information Systems classmates for sharing their

extensive and diverse knowledge skills and experiences during the course I

acknowledge friends and colleagues in Botswana who encouraged me to

pursue this programme particularly Dr Jorosi for the inspirational advice

Special thank to my sincere friend Patience Chakandinakira for her moral

supportTo Dr Phil Lyoka thank you for the editing and grammar corrections

and all the support you gave throughout this project

Due to technical limitations I am not able to list everyone but I OWE ALL OF

YOU who provided moral academic technical economic support or

otherwise a very BIG THANK YOU including whoever reads this work

vii

LIST OF ABBREVIATIONS

BIDPA Botswana Institute for Development Policy and Analysis BOI Board of Investment ESRC Economic And Social Research Council EPZ Export Processing Zones FDI Foreign Direct Investment GDP Gross Domestic Product GSP General System of Preferences IB International Business ICT Information Communication Technologies ILO International Labour Organisation IT Information Technology ISO International Organization for Standardization IVTB Industrial and Vocational Training Board MEDIA Mauritius Enterprise Development Investment Authority MNC Multinational Companies NAFTA North American Free Trade Agreement NHPA National Handicraft Promotion Agency OECD Organisation for Economic Co-operation and Development SADC Southern African Development Community SEHDA Small Enterprises amp Handicraft Development Authority SME Small and Medium Enterprise SMME Small medium and micro-enterprises SMIDO Small amp Medium industries Development Organisation UK United Kingdom UN United Nations USA United States of America WTO World Trade Organization

viii

LIST OF ILLUSTRATIONS TABLES Table 1 THE STUDY TIME SCALE

2 RESPONDENTS RATE ACCORDING TO SECTORS

3 AGE GROUP AS PER PARTICPANT

4 GENDER PROFILE

5 EDUCATION PROFILE 6 YEARS EMPLOYED AS CEO 7 COMPANY AGE PROFILE 8 NUMBER OF EMPLOYEES 9 ANNUAL SALES 10 OWNERSHIP

FIGURES 1 MAP OF MAURITIUS SHOWING ALL PROVINCES

2 MAURITIUS MAP SHOWING POLITCAL DIVISIONS

3 THE DYNAMIC OF TOP-DOWN-BOTTOM-UP PROCESS ACROSS LEVELS OF CULTURE

4 PUTZ MODEL FOR IMMIGRANT BUSINESS AND CULTURE

5 THE BASIC MECHANISM OF INTERNATIONALISATION-STATE AND CHANGE ASPECT

ix

ABSTRACT

In this new millennium few executives can afford to turn a blind eye to global

business opportunities The globalizing wind has broadened the mindsets of

executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories One such new

trajectory is the concern with national culture Whereas traditional IB research

has been concerned with economic legal issues and organizational forms and

structures the importance of national culture has become increasingly

important in the last two decades largely as a result of the classic work of

Hofstede (1980) National culture has been shown to impact on major

business activities from capital structure (Chui et al 2002) to group

performance (Gibson 1999)

The purpose of this study was to understand the concept on how to penetrate

a new international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

Data was collected through telephone interview web survey literature review

and face to face interview involving business managers legal stakeholders

and government officials and former government ministers About 17

telephone interviews were done with only government officials 4 face to face

interviews and 140 web survey interviews questions All the respondents were

x

randomly selected and respondents would suggest further participants Data

was put in to categories and themes and analysed according to those themes

Putz (2000) model was used as guide to selection of themes

Findings revealed the following 1 Language and religion are not a barrier to

foreign investment in Mauritius 2 Mauritius is a peaceful and tolerant nation

and most of its social life revolves around family and friends 3 Market

opportunities exits in the manufacturing industry offshore financial services

cyber culture and the construction industry 4 The country‟s business

economy faces stiff competition from Botswana South Africa and Vietnam 5

The government plays an important role in ensuring security for foreign

investors

From the results it was concluded that culture plays an important role in the

daily lives of the Mauritian people but it does not have a direct impact to

investment in Mauritius

1

CHAPTER ONE

INTRODUCTION

Globally Small and Medium Enterprises (SMEs) are increasingly regarded as

vital for diversifying economies through the creation of employment

(Machacha 2002 p 277) The OECD (2000) notes that small and medium-

sized enterprises account for 60-70 percent of jobs created in member

countries Southwood (2004) in discussing the status of the SME sector in

Africa observed that governments and large corporations dominated

economies of the countries yet the real engine of economic growth lay with

SMEs Muuka (2002 p 1) in discussing the SME sector in Africa noted that

the informal sector is huge due to the large numbers of employees it absorbed

as a consequence of inadequate jobs and opportunities in the formal sector

The author points out that in many African countries the informal sector is

estimated to employ from three to six times the number of employees in the

formal sector However very little has been documented through research

about this important sector

In Mauritius the Mauritian government believes that the real engine of

sustainable and equitable growth is in the SME sectors Not only is it of great

importance for the rate of job creation and income generation but also it

deserves particular attention since the sector has been largely neglected in

the past In this respect this study of Mauritius is important in addressing

some of issues of culture by using the International business as a framework

for this study to understand the business environment in Mauritius and the

potential for growth in a global perspective (Stone 1997)

2

In this new millennium few executives can afford to turn a blind eye to global

business opportunities Japanese auto-executives monitor carefully what their

European and Korean competitors are up to in getting a bigger slice of the

Chinese auto-market Executives of Hollywood movie studios need to weigh

the appeal of an expensive movie in Europe and Asia as much as in the US

before a firm commitment The globalizing wind has broadened the mindsets

of executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories

However research shows that as markets competition and organisations

globalise the business people businesses themselves and consumers

involved in these institutions increasingly have to interact manage negotiate

and compromise with people from different cultures (Hofstede 1997

Hoecklin 1995) Global business managers report that when doing business

overseas challenges mount For example structural conditions physical

social and economic arrangements can affect business operations and

outcomes as can the varied norms and behaviours that come with different

national cultures

One such new trajectory is the concern with national culture Whereas

traditional IB research has been concerned with economiclegal issues and

organizational forms and structures the importance of national culture

broadly defined as values beliefs norms and behavioral patterns of a

national group (Hofstede1980) has become increasingly important in the last

two decades largely as a result of the classic work of Hofstede (1980)

3

National culture has been shown to impact on major business activities from

capital structure (Chui et al 2002) to group performance (Gibson 1999) For

reviews see Boyacigiller and Adler (1991) and Earley and Gibson (2002)

Weisinger and Trauth (2003) report that culture evolves and takes unique

forms in local offices of organizations This means that culture is both dynamic

and situated in its local context Thus external conditions both structural and

cultural can influence global business Yet small and medium enterprise

(SMEs) managers can have an impact on how their organizations‟ cultures

evolve Therefore strategic leaders need to introduce unique norms values

and processes that fit together coherently in successful organizations

Therefore the main purpose of this case study is to explore and understand

the Small Medium Enterprise (SMEs) business environment in Mauritius and

how SMEs can penetrate the business culture there

The purpose of this paper is therefore to explore and understand how national

culture influences international business decisions and how to culture affects

international business investment using Mauritius as a case study

In this chapter the author outlines the background of the study specifies the

study objectives describes the significance of the study gives methodological

overview and finishes off by outlining definitions of key terminologies

4

11 Background to the Study

Strategically located in the Indian Ocean at the crossroads of Africa and Asia

Mauritius is reputed for its beautiful countryside and its 150 kilometres of white

sandy beaches and transparent lagoon A British colony that gained

independence in 1968 officially known as Republic of Mauritius the country is

positioned to the east of the Madagascar Islands The geographical

coordinates of the nation are 20ordm17 South latitude and 57ordm33 East longitude

The total area covered by the island nation is 2040 square kilometres

Mauritius enjoys a maritime sub-tropical climate and is therefore an all-year-

round holiday destination From a monocrop economy depending mainly on

sugar it has diversified its economic activities into textile and apparel

industry tourism and financial service Mauritius has witnessed a massive

development in the last decades (SMIDO 2006)

5

Figure 1 Map of Mauritius showing all Provinces

Source Encarta World atlas online

6

Figure 2 Mauritius map showing political divisions of the country

Source Maps of the world online

The research area was around the capital city Port Louis marked in red For

anonymity the site was just called A or B Administratively Mauritius is divided

into nine Provinces (figure 2)

The country is remarkable in its ethnic diversity It forms a unique mosaic of

immigrants from the Indian sub-continent Africa Europe and China The

cultural diversity and harmony of the island make Mauritius a unique place in

the world The various religions found on Mauritius tend to play a major part in

7

the islands cultural events and churches temples and mosques are to be

found everywhere Hindus make up approximately half of religiously affiliated

Mauritians followed by Muslims and Christianity as the minority It is also

known for its social peace political stability and racial harmony Its steady

economic growth over the years coupled with its nation‟s social cohesion and

prosperity ensure continuing development (Country Profile 2005)

The country is equipped with a highly skilled labour force to suit virtually all

business in two international languages English and French and a very good

infrastructure thereby attracting Foreign Direct Investment The average

economic growth was 56 over the last 3 years The income per Capita has

reached 4000 US Dollars As a result the standard of living has gone up The

country has now a life expectancy rate of 714yrs an adult literacy rate of 83

(Country Profile 2005)

To face globalisation and a new economic environment the Government has

taken several steps High value-added capital intensive and knowledge-

based activities are on the priority list The Information Technology sector is

undergoing rapid changes so as to be fit for the next millennium The aim is to

make Mauritius a centre for high-tech and software services which can be

exported (Commonwealth Secretariat 2006)

8

12 An Overview of Mauritian Economy

The economy of Mauritius has experienced major structural transformation

over the last two decades The country has moved away from a mono-crop

economy with fast population growth high unemployment and low per capita

income to one that is more dynamic and diversified The sources of

diversification have been agriculture export manufacturing (mainly textile)

tourism and more recently international services with Offshore and Freeport

activities (Country profile 2005)

To respond to the global competition in these sectors Mauritius has made

extensive use of modern technology to improve its productivity and efficiency

The real growth rates have been around 54 over the past four years and

Mauritius is now classified as a middle-income country and is one of the

healthiest economies in the whole African region (Country profile 2005) The

sugar sector provided the start-up capital for the Export Processing Zones

(EPZ) The rapid rate of growth of investment in the manufacturing sector

(investment grew by over 30 each year from 1983 until the late 1990s in this

sector) that led to the success of the EPZ and the Mauritian economy as a

whole This was made possible by the confidence of entrepreneurs and

foreign investors prevailing in the country at that particular time The private

sector accounts for approximately 70 of total capital formation in Mauritius

Investment rate stood around 27 in the four years ending 1996 peaking to

30 in 1994 (SMIDO 1996)

9

When the government recommended the diversification of the economy with

the creation of Export Processing Zones in the early 1980‟s the EPZ sector

benefits from duty-free and quota free access into European Union markets

granted under the Lomeacute Convention as well as tariff preferences granted

under the General System of Preferences (GSP) by countries such as North

America and Japan The mid 1980s witnessed a textile boom raising per

capita incomes and living standards However the conclusion of the Uruguay

Round (General Agreement on Trade amp Tariffs) implies the loss of guaranteed

markets and preferential access which will result in strong competition in

these respective markets (Country profile 2005)

The new strategy of the industrial sector aims at targeting high quality and

high value added products with a view to restoring the competitiveness of the

goods by applying latest technology to the manufacturing industry and hence

improving the quality of the finished products Limited data is available

regarding the SME sector in Mauritius The current research has observed

that there is little research in the field in SME sector in Mauritius

In view of the importance of foreign investment as a source of sustenance to

economic growth the government of Mauritius has taken a series of policy

measures to encourage its flows into manufacturing offshore banking and

financial services information technology communication and tourism As far

as foreign investors are concerned Mauritius offers itself as an attractive

destination because several positive features such as political stability

10

availability of skilled labour and investment-friendly rules and institutions

(Stone 1997)

With such a promising economy there is virtually no evidence on how to

penetrate the business culture in Mauritius and how culture can affect SMEs

and business opportunities therefore this study will explore and understand

the business environment in Mauritius and the challenges of doing business

there as a foreign investor Currently there is very little research done on

SMEs and culture in Mauritius

13 Mauritius SME Background

Experience shows that attitudes towards small business vary from decade to

the next from country to country Before the industrial revolution all business

was small business but with industrial and commercial expansion of

developed nations small has become medium and medium has become big

business

Business owners and managers have often seen growth as an end in itself

and at time the cry get big or get out has been heard in most nations

(Meredith 2004) For more than two decades SMEs have experienced

favourable growth SME has long been prominent in the countrys economy

and make up a large portion of national economy in terms of output

employment and effective utilisation of regional resources Small and medium

enterprises in Europe make up 998 of all European enterprises provide

66 of its jobs and account for 65 of its business turnover (Meredith 2004)

11

In developing countries SMEs account more than 90 of all enterprises

Over the last five years they have been responsible for more than 80 of job

created (Stone 1997) On the issue of job creation Stone (1997) found that

SMEs create more employment than large enterprises and with a lower

investment per job created SMEs are not usually associated with international

activity but they do in fact play a significant international role and their

importance appears to be increasing Available data on SMEs international

activity are very limited (Stone 1997)

In general terms and depending on the country SMEs contribute between

15 and 50 of exports and between 20 and 80 of SMEs are active

exporters Overall it is estimated that SMEs now contribute between 25 and

35 of world-manufactured exports (UN 2005) Increased exports not only

boost the level of sales and employment but also extend the life cycle of

goods and services

In Mauritius SMEs represent 19 according to a report issued by the

Commonwealth Secretariat entitled a Study of Small Firm export Policies

and Institutions in Mauritius Subsequently these SMEs have developed

gradually and move from their tradition orientated operations to export-led

firms probably due to improvement of technology in the field of communication

and the new economic dimension which prevailed

At this juncture it is important to report that few studies on culture and small

and medium entrepreneurship have been conducted on Sub-Saharan Africa

12

There is a paucity of information and even those scarce studies they do not

cover broad perspectives of the situation of SMEs in Sub-Saharan Africa

Therefore this study builds upon the existing limited body of research

regarding how business cultures contribute to the success or failure of small

and medium entrepreneurs In particular it explores the business culture in

Mauritius and its barriers to penetration for new and foreign small and

medium entrepreneurs

14 Purpose Statement

The purpose of this study was to understand the concept on how to penetrate

an international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

15 Aims and Objectives

To investigate the challenges of national cultural differences in

business in Mauritius

To investigate how to penetrate the business environment for a new

and or foreign business culture especially in Mauritius

To investigate business opportunities for SMEs in Mauritius and how

these can benefit the locals

13

16 Research Question

How can Small and Medium Enterprises penetrate the business culture in

Mauritius

These sub-questions all pertain to SMEs business

o 161 SUB-QUESTIONS

What kind of businesses are operating in Mauritius now

What are their business strategies (marketing brands) etc

What are the necessary mechanisms for establishing business in

Mauritius

What are the business needs of established and starting businesses

What are the mechanisms for potential growth of local business

What are the challenges for doing business in Mauritius

How much of business behaviour is influenced by the national culture

17 The Significance of the Study

The findings of the current study will increase the understanding of cultural

barriers to market penetration for SMEs in Mauritius The study adds

knowledge to the body of literature in this area focusing at further

improvement of understudying of culture and business issues The

study becomes part of the universitys education development in line with its

obligations to the communities and the country This research problem arose

from an information need of a particular client This research therefore will try

to explore the client‟s information need and probably contribute to the wealth

of knowledge

14

18 Definitions

CULTURE Hofstede (1997) defines culture as ldquothe collective programming of

the mind which distinguishes the members of one group or category of people

from anotherrdquo It is the norms beliefs and values common to a society

Culture is about the way people understand their world and make sense of it

It only when this is taken for granted assumptions are challenged that people

realise that they even exist (Hofstede 1997)

ENTERPRISE An enterprise is considered to be any entity engaged in an

economic activity irrespective of its legal form This includes in particular

self-employed persons and family businesses engaged in craft or other

activities and partnerships or associations regularly engaged in an economic

activity (European Commission 2003)

INTERNATIONAL BUSINESS International business consists of transactions

that are devised and carried out across national borders to satisfy the

objectives of individuals and organizations The Primary Types of International

Business Activities Are Importing and Exporting Direct Foreign Investment

(Govindarajan and Gupta 2001)

GLOBALISATION refers to a bdquogrowing economic interdependence among

countries as reflected in the increased cross-boarder flow of three types of

entities goods and services capital and knowhow‟ (Govindarajan and Gupta

2001 4)

15

SMALL AND MEDIUM INTERPRISES (SME) is made up of enterprises

which employ fewer than 250 persons and which have an annual turnover not

exceeding EUR 50 million andor an annual balance sheet total not

exceeding EUR 43 million (European Commission 2003)

In Mauritius an SME has been redefined taking into account the volume of

investment in equipment which was previously one million up to 10 millions

Mauritian Rupees presently to be classified as a small enterprises and with

less than 50 and 200 employees for small and medium scale respectively

(Stone 1997)

16

CHAPTER TWO

LITERATURE REVIEW

The aim of this chapter is to introduce conceptual themes that are important in

order to understand the role of culture in international business The chapter

discusses the context of relationship between culture and international

business practices in small and medium enterprises (SMEs) and the major

challenges they face in the area of globalisation A model adopted from Putz

(2000) forms a framework for articulating the conceptual role that culture has

in international business using Mauritius as a case study

21 Embracing Cultural change in an era of globalization

A significant theoretical issue for international business is the role of culture in

the whole aspect of information transformation Since the landmark study by

Haire et al (1966) and the publication of Industrialism and Industrial Man by

Kerr et al (1960) researchers have continued to search for similarities in

culturally specific beliefs and attitudes in various aspects of work related

attitudes as well as consumption patterns and other behaviours If cultures of

the various communities of the world are indeed converging (Heuer et al

1999) International Business (IB) related practices would likely become

increasingly similar For example standard culture-free business practices

would emerge and inefficiencies and complexities associated with divergent

beliefs and practices in the past era may disappear (Heuer et al 1999)

17

Studies elsewhere suggest that culture gets affected by globalization practices

in the current 21st century Globalization has seen flows of information

technology money and people and is conducted via international

government organizations such as the African Union the North American

Free Trade Agreement (NAFTA) and the European Community global

organizations such as the International Organization for Standardization

(ISO) multinational companies (MNCs) Also includes cross-boarder alliances

in the form of joint ventures international mergers and acquisitions These

interrelationships have enhanced participation in the world economy and

have become a key to domestic economic growth and prosperity (Drucker

1995 153)

Literature suggests that because globalization tends to redistribute economic

rewards in a non-uniform pattern a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) Strong opposition to

globalization usually originates from developing countries that have been

affected by the destabilizing effects of globalisation However in recent years

there have been heated debates in Western economies triggered by

significant loss of professional jobs as a result of offshoring to low wage

countries (Schaeffer 2003)

Workers in manufacturing and farming in advanced economies are becoming

increasingly wary of globalization as their income continues to decline

18

significantly In parallel to the angry protests against globalization the flow of

goods services and investments across national boarders has continued to

fall after the rapid gains of the 1990s The creation of regional trade blocs

such as NAFTA the European Union and the Association of Southeast Asian

Nations have stimulated discussions about creating other trade zones

involving countries in South Asia Africa and other parts of the world

Although it is often assumed that countries belonging to the World Trade

Organization (WTO) have embraced globalization the fact is that the world is

only partially globalized at best (Schaeffer 2003)

Many parts of Central Asia and Eastern Europe including the former

republics of the Soviet Union parts of Latin America Africa and parts of

South Asia have raised heightened scepticism about globalization (Greider

1997) In fact less than 10 of the world‟s population are fully globalized (ie

being active participants in the consumption of global products and services)

(Schaeffer 2003)

According to Guile`n (2001) these trends might indicate that globalization is

being impeded by tendencies towards country-specific modes of economic

development making the convergence of IB-related values and practices

difficult to achieve Hofstede (1980)‟s favourite definition of f ldquoculturerdquo is

precisely that its essence is ldquocollective mental programmingrdquo it is that part of

peoples conditioning that they share with other members of their nation

region or group but not with members of other nations regions or groups

Hofstede (2001) asserts that these mental programs of people around the

19

world do not change rapidly but remain rather consistent over time His

findings tend to suggest that cultural shifts are relative as opposed to

absolute Although clusters of some countries in given geographical locales

(eg Argentina Brazil Chile) might indicate significant culture shifts towards

embracing Anglo values the changes do not diminish the absolute differences

between such countries and those of the Anglo countries (ie US Canada

UK)

According to Hofstede (1980) Examples of differences in mental

programming between members of different nations can be observed all

around us One source of difference is of course language and all that

comes with it but there is much more In Europe British people will form a

neat queue whenever they have to wait not so the French Dutch people will

as a rule greet strangers when they enter a small closed space like a railway

compartment doctor‟s waiting room or lift not so the Belgians Austrians will

wait at a red pedestrian traffic light even when there is no traffic not so with

the Dutch Swiss tend to become very angry when somebody-say a foreigner

makes a mistake in traffic not so with the Swedes All these are part of an

invisible set of mental programs which belongs to these countries‟ national

cultures Such cultural programs are difficult to change unless detaches the

individual from his or her culture Within a nation or a part of it culture

changes only slowly (Hofstede 1980)

20

This is the more so because what is in the minds of the people has also

become crystallized in the institutions namely government legal systems

educational systems industrial relations systems family structures religious

organizations sports clubs settlement patterns literature architecture and

even in scientific theories All these reflect traditions and common ways of

thinking which are rooted in the common culture but may be different for other

cultures (Hofstede 1980)

22 The dynamics of Culture as a Multi-level Multi- layer construct

Multi-level approaches of viewing culture as a multi-level construct that

consists of various levels nested within each other from the most macro level

of a global culture through national cultures organisational cultures group

cultures and cultural values represented the self aspect of the individual See

figure 3

21

Figure 3 The dynamic of top-down-bottom up process across levels of

culture (Source Schein 1992)

The model proposes that culture as multi-layer construct exist at all levels

from global to the individual Changes that take place at the external layer of

behaviour are most likely shared by individuals who belong to the same

cultural background level hence characterising the aggregated unit (Schein

1992)

Top-

Down

Individual

Behaviour

Values

Assumptions

Global Culture

National Culture

Organizational Culture

Group Culture

Bottom

Up

22

Below the global level are nested organizational layers or networks at the

national level with their local cultures varying from one nation or network to

another Further down are local organizations and although all of them share

some common values of their national culture they vary in their local

organizational cultures which are also shaped by the type of industry that

they represent the type of ownership the values of the founders etc Within

each organization are sub-units and groups that share common national and

organizational cultures but differ from each other in their unit culture based on

differences in functions of their leaders‟ values and the professional and

educational level of their members At the bottom of this structure are

individuals who through the process of socialization acquire the cultural values

transmitted to them from higher levels of culture Individuals who belong to the

same group share the same values that differentiate them from other groups

and create a group-level culture through a bottom-up process of aggregation

of shared values (Schein 1992)

Both top-down and bottom-up processes reflect the dynamic nature of culture

and explain how culture at different levels is being shaped and reshaped by

changes that occur at other levels either above it through top-down

processes or below it through bottom-up processes(Schein 1992) Similarly

changes at each level affect lower levels through a top-down process and

upper levels through a bottom-up process of aggregation The changes in

national cultures observed by Inglehart and Baker (2000) could serve as an

23

example for top-down effects of economic growth enhanced by globalization

on a cultural shift from traditional values to modernization

In view of the complexity of the organizational structures specific

organizational structures that have global character need to be established so

as to adopt common rules and procedures in order to have a common

bdquolanguage‟ for communicating across cultural borders (Kostova 1999 Kostova

and Roth 2003 Gupta and Govindarajan 2000)

Given the dominance of Western Multi National Companies (MNCs) the

values that dominate the global context are often based on a free market

economy democracy acceptance and tolerance of diversity respect of

freedom of choice individual rights and openness to change (Gupta and

Govindarajan 2000) The multi-level structure explains how a lower-level

culture is being transformed by top-down effects and that the cultural layer

that changes first is the most external layer of behaviour In the long run

bottom-up processes of shared behaviours and norms would affect the local

organizational culture as well (Schein 1992)

23 International Business and Culture

Knowledge of cultural differences is one of the key components in

international business practices and success Improving levels of cultural

awareness can help companies build international competencies and enable

individuals to become more globally sensitive (Hofstede 2003) Indeed

cultural differences contribute towards different ways people behave in

24

business Research in the field of international management underscores that

the attributes of cultural knowledge used by a firm play an important role in the

firms expansion For example Martin and Salomon (2003) found that cultural

orientation in entrepreneurial action is a central theme and can serve as a

starting point for immigrant business

ldquoUnderstanding the culture and the conceptualisation of culture in conjunction with entrepreneurial action is a critical issue when doing business in an international environment Contributions of economic geography inspired by the cultural turn which shows alternative ways of thinking about the connection between culture and economy by using a new understanding of culture are also critical (pg 198)rdquo

The statement underscores the important of understanding the culture of a

society before attempting to do business there otherwise the company runs a

risk of going out of business The ways in which different groups of people

interpret their environment and organise their activities is based the on the

specific cultural values and assumptions Certain values often thought to be

universal really do differ from culture to culture What constitutes an ethical

business practice is not the same everywhere This can be an enormously

difficult area in managing business across cultures (Straub et al 2002)

Although one may claim cultural differences to be going away they are

actually being absorbed in the business practices This makes it more critical

than ever to try to understand different cultures and their influence on the

ways people do business and view the world The costs of not understanding

are getting greater than ever The essence of culture is not what is visible on

the surface It is the shared views about what people understand and interpret

25

the world These cultural differences are crucial influences on interactions

between people working and managing across culture (Gertler 1997)

The social behaviour of a society is embedded in a particular context and is

connected to other deeply held values and beliefs (Weisinger and Trauth

2003) This means that the stakes are high for mismanaging cultural

differences Ignoring or mishandling differences can result in an inability to

retain and motivate employees a misreading of the potential of cross-border

alliances marketing and advertising blunders and failure to build sustainable

sources for competitive advantage Mismanaging cultural differences can

render otherwise successful managers and organisations ineffective and

frustrated when working across cultures (Weisinger and Trauth 2003)

24 Putz Model For Immigrant Business and Culture

Literature in the field of Immigrant Business differentiates mainly between two

basic approaches each with a different emphasis which are combined to

explain entrepreneurial action of immigrants (Putz 2000) The first approach

emphasis the bdquoopportunities‟ offered by the host country including access to

the market and job market conditions The second approach focuses on the

bdquoresources‟ of migrant groups from whom the concept of culture becomes

essential (see Figure 1 below)The Putz (2000) cultural model below is a

summary of explanatory approaches following the assumption that self

employment of certain groups is the result of their specific cultural

predisposition which favours business activity

According to Putz‟s (2000) view of cultural model the bdquoopportunities‟

approach which refers to market possibilities as an explanation for self

26

employment of immigrants assume that there are certain market segments

with favourable development perspectives especially for immigrant groups

Here two factors receive special attention which are niche markets and legal

and institutional frameworks Niche markets make the establishing of business

by immigrants easier because their needs for consumer goods create specific

demand Legal and institutional frameworks gain awareness in international

comparative studies through restrictions specified by a country regarding

business permits and regulations these frameworks influence both the extend

and the sectored structure of the bdquoimmigrant business‟ (Putz 2000)

According to Putz (2000) the observation that most immigrant groups show a

higher level of self employment rate than others often forms the background

explanation which focus on opportunities created by the host society

Resource models stress the shared characteristics of migrants of same origin

Resources models explain that certain groups have specific cultural

resources which make it easier for members of that group to become self

employed therefore one can distinguish between the cultural traditions and

socialethnic networks ( Putz 2000)

27

Figure 4 Dominating models concept of bdquoImmigrant Business‟ (Source Putz

2000)

OPPORTUNITIES

Market Access

Possibilities

Market Conditions

Niche Markets

lsquoOpenrsquo Markets

Job Market

Conditions

Access

Vertical Mobility

Legal and Institutional

Frameworks

lsquoEthnicrsquo

Business

RESOURCES

lsquoClass Resourcesrsquo lsquoCultural Resourcesrsquo

Cultural

Traditions

Social lsquoEthnicrsquo

Resources

28

When successfully managed differences in culture can lead to innovative

business practices faster and better learning within the organisation and

sustainable sources of competitive advantage (Sondergaard and Hofstede‟s

1994) In relation to that the current study argues that managers need to

study and understand the culture and the niche market before investing This

assumption has been raised as a result of the previously reported experiences

and research findings already reported so far It is therefore critically important

to understand that every society has got its own way of behaving which needs

to be understood if the business is to succeed Operating companies need to

understand what their business means to the people of the given community

and their culture

Several studies of international business have indicated that

internationalization of the firms is a process in which the firms gradually

increase their international involvement(Johanson amp Wiedersheiml 1995

Gibson 1999 Chui et al 2002 ) It seems reasonable to assume that

within the frame of economic and business factors the characteristics of this

process influence the pattern and pace of internationalization of firms Figure

5 below shows a model of the internationalization process of the firm that

focuses on the development of the individual firm and particularly on its

gradual acquisition integration and use of knowledge about foreign markets

and operations and on its successively increasing commitment to foreign

markets The basic assumptions of the model are that lack of such knowledge

is an important obstacle to the development of international operations and

that the necessary knowledge can be acquired mainly through operations

abroad (Johanson and Wiedersheiml1995)

29

FIGURE 5 The Basic Mechanism of Internalisation- State and Change Aspects

Figure 5 Basic Mechanism of Internalisation (Source Johanson amp

Wiedersheiml 1995)

Market knowledge and market commitment are assumed to affect both

commitment decisions and the way current activities are performed These in

turn change knowledge and commitment ( Aharoni 1966) In the model it is

assumed that the firm strives to increase its long-term profit which is

assumed to be equivalent to growth (Williamson 1966) The firm is also

striving to keep risk-taking at a low level These strivings are assumed to

characterize decision-making on all levels of the firm Given these premises

and the state of the economic and business factors which constitute the frame

in which a decision is taken the model assumes that the state of

internationalization affects perceived opportunities and risks which in turn

influence commitment decisions and current activities (Johanson amp

Wiedersheiml 1995)

Market

Knowledge

Market

Commitment

Commitment

Decisions

Current

Activities

30

2 5 The Role Of Information Communication Technologies

Hofstede (2001) observed that not only will cultural diversity among countries

persist but also new technologies might even intensify the cultural differences

between and within countries Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

Information communication technologies (ICTs) enable users to access varied

amounts of information globally however it does not necessarily increase

their capacity to absorb the information at the same rate as the information is

disseminated or diffused (Bhagat et al 2002) In addition information and

knowledge are interpreted through cultural lenses and the transfer or diffusion

of organizational knowledge is not easy to accomplish across cultural

boundaries (Bhagat et al 2002)

Ethnic groups around the world observe the lifestyles and cultural values of

other countries and some are interested in adopting part of the lifestyle and

values but others reject it completely (Kirkman and Shapiro 2000) The

effects of new technologies on improving efficiencies of multinational and

global corporations are well known but it is not known how these new

technologies especially computer-mediated communication and the Internet

31

might create significant shifts in the cultural patterns of different ethnic groups

(Kirkman and Shapiro 2000) or on their ways of doing business

In essence there in need to explore how the spread of ICTs is affecting the

progress of globalization in different parts of the world by incorporating the

role of cultural syndromes organizational cultures and other processes

which has recently been attempted by scholars such as Bhagat et al (2003)

and Gibson and Cohen (2003)

Information and Communications Technology (ICT) has become a catchword

with different interpretations and viewpoints even among experts As the

name suggests ICT encompasses all the technology that facilitates the

processing transfer and exchange of information and communication

services In principle ICTs have always been available since the advent of the

printing press The only difference is that from the late twentieth century rapid

advances in technology changed the traditional ways in which information was

processed communications conducted and services available (Adu 2002)

These technological advances have changed business operations and the

way people communicate They have introduced new efficiencies in old

services as well as numerous new ones One could even imagine going as far

as replacing the term Post-industrial Society with ldquoInformation Society that

is a society where the ability to access search use create and exchange

information is the key for individual and collective well-being (Kaplan 2001)

32

Globally entrepreneurship is considered as the engine of economic

development The SME sector has the potential to address socio-economic

challenges facing both developing and developed countries Without small

business development it is argued that economies stagnate unemployment

levels continue to rise and the general standard of living deteriorates

Information and communications technology (ICT) has been identified as a

major area of need to develop the SME sector in areas of information

provision access to national and international markets and other areas of

business development and support ( Ferrand and Havers 1999)

ICTs enable entrepreneurs to manage their businesses efficiently and thus

enhancing their competitiveness in the global market They can increase their

geographic reach improve efficiency in procurement and production and

improve customer communications and management For these reasons the

need to encourage and accelerate the uptake and optimal application of ICTs

by SMEs in different sectors of the economy cannot be overemphasized

(Ramsay et al 2003) The ICT sector has the potential to absorb prospective

entrepreneurs considering various business opportunities offered by the

sector Some of the business opportunities available within the sector relate to

systems integration application development database administration web

design and internet service provision The sector is also seen as an area with

major opportunities for the historically disadvantaged sectors of the

population It therefore becomes imperative for government to provide

mechanisms to accelerate the entry of SMMEs into the ICT sector (ILO 2001)

33

26 Cross Culture and International Business

Cross-cultural management advice rests on several assumptions in the

tradition of Hofstede (1997) that a) that national culture is comprised of norms

and values that can be readily identified and addressed b) that these norms

values and patterns of behaviour are stable and change at an extremely slow

pace and c) that national culture predominates over organizational culture

epistemic culture gender or other determinants of attitudes and behaviour

According to Hosftede (1997) national culture is comprised of norms and

values that can be readily identified and addressed

Organisational culture (common values and attitudes) affects organizational

success and innovation develops over time and may be difficult to change

ldquoThere is a relationship between an organization‟s culture and its

performance The pervasive nature of organizational culture means that if

change is to be brought about successfully this is likely to involve changes to

culturerdquo (Mullins 1999)

An alternative view sees culture as more complex context-specific and

dynamic For example Weisinger and Trauth (2003) examined the interaction

of national cultures the IT industry culture and a particular firm‟s

organizational culture They observed that the resulting situated culture ldquois

fluid contextually dependent and created by actors within a group who may

hold conflicting assumptions and world viewsrdquo In other words culture is as

what it is because of what it does This means that management must ensure

34

that key capabilities for example marketing analytics or process controls are

developed and nurtured across the organization

Successful global managers recognize that they cannot respond to every

unique opportunity that local settings offer Thus there is an inherent tension

in cultural sensitivity a management team which is ldquotoo sensitiverdquo to cultural

and structural features exposes the organization to the risks that come with a

lack of focus and coherence while managers who do not take cultural and

structural features into account expose the organization to the risks that come

with organizational rigidity (Myres and Tan 2002)

According to Mistry (1999) entrepreneurial networks and clusters in sub-

Saharan Africa have not generally produced the kind of strong transnational

links that characterize Asia‟s flourishing pattern of industrial diffusion The

author states that the reasons for this are complex differences in geography

different models provided by leading countries in the neighbourhood and

policies adopted by governments in the respective regions Chinese business

networks are responsible for some of the information ideas and capital that

helped launch the small Indian Ocean nation of Mauritius as an important

centre for export-oriented industry The Chinese networks in Mauritius also

continue to facilitate a role that Mauritius first began to play in the eighteenth

century they serve as a gateway for overseas Chinese entrepreneurs

interested in investing both in Mauritius and elsewhere in Africa (Mistry 1999)

35

27 Investing in Mauritius

There are a lot of advantages in investing in Mauritius The economy of the

country is stable and the graph of the economy and business is one the rise

for a considerable period of time The Mauritius government has undertaken a

sequence of strategic measures to support its course into offshore banking

manufacturing and financial services communication technology and tourism

keeping in mind the significance of foreign investment as a basis of

nourishment of the financial development (Dabee and Greenaway 2001)

According to Dabee and Greenaway (2001) tthere are various factors that

influence financiers to invest in Mauritius like accessibility of skilled labor

political constancy and venture-friendly institutions and regulations One of

the major factors for the development of Mauritius is the Foreign Direct

Investment (FDI) The government of Mauritius has given all the necessary

support to create the most favorable investment setting by the following steps

Building modern infrastructure

Endorsing suitable legislations

Commencing packages of investment inducements

Investing in human capital

Some of the advantages of investing in Mauritius are as follows

High-quality infrastructure with superb transportation

Democracy and a steady government

Free market financial system fastened on export slanting activities

Excellent system of sea and air transport

36

High standard of living good international schools

A highly educated bilingual and responsive work force

Knowledgeable financial segment providing outstanding services

Constructive market contact and good inducements ( IBP 2002)

Mauritius has various sectors where investment can be made like Information

and Communication Technology and manufacturing For doing business in

Mauritius registered trademark is required The trade marks for business are

issued by the registered Patents and Trademarks sector of Ministry of Foreign

Affairs International Trade and Cooperation In the country of Mauritius a

foreigner is eligible to hold 100 shares In this case one of the directors of

the company has to inhabit in Mauritius and the foreign individual has to

obtain a sanction from the Office of Prime Minister (IBP 2002)

In Mauritius the laws concerning income tax is based on the English law of

income tax The companies in Mauritius are lawfully accountable to pay out

income tax on their profits at an even rate of 25 A company which is

included in the country or has its scheming benefit in the country is measured

for tax reasons to be an occupant corporation To the Mauritius companies

various types of tax incentives are granted The companies that hold

certificate for Tax inducement are responsible to tax at an abridged rate of

15 while the scheduled companies are accountable to pay tax at the rate of

25 ( Dabee and Grrenaway 2001)

37

CHAPTER THREE

METHODOLOGY

Having looked at culture to some depth this chapter explains the methods

used in carrying out the study The study used mixed method approach to

allow for data corroboration and dynamism since the subject in question

needed dynamism and sensitivity in approach

This research mixed both qualitative and quantitative approaches to try and

get best possible research by combining both features because they

complement each other Quantitative data techniques condense data in order

to get a bigger picture whereas qualitative techniques are data enhancers

making it possible to see issues more clearly (Dawson 2002 Neuman 2000)

Attempt was made to keep in line with recommendation made in the Leeds

Declaration proposition number 6 which calls for the application of multiple

methods and perspectives to try and understand social and cultural issues

(Hunter and Lang 1993) Mixing qualitative and quantitative methods also

called positivist and interpretive respectively (Gilbert 2001 and Bowling 2002)

is effective in a complex issue study such as this one because they highlight

different perspectives of the same problem in this case - the public in parallel

with the individual level(Gilbert 2001) This is because quantitative methods

adopt a numerical approach to data collection and analysis to provide macro

level perspective whereas qualitative methods provide micro level perspective

through collecting data from individuals (Ibid)

38

There was also use of impersonal (public) documentation using official

records which were more library based research (Grbich 1999) on top of

theory generating field based methods (Ibid) Many researchers (Bowling

2002 Neuman 2000 Grbich 1999 Denscombe 2003 and Gilbert 2001)

concur that neither of the methods is superior to the other but just different

each having its strengths and weaknesses (Dawson 2002)

The study sought to explore the attitudes behaviour subjective meanings and

experiences of the participants making qualitative approaches best suited

because they emphasize the importance of context (Neuman 2000) However

to generate objective and factual (Maynard and Purvis 1994) statistical

figures quantitative research was more suitable Hence mixing of methods

(Dawson 2002 Denscombe 2003) to counteract weaknesses in both

approaches to give breadth and width to the study (Maynard and Purvis

1994) The flexibility of qualitative research allowed for re-focusing and

refinement of the tool dependent on participants‟ reactions throughout

(Neuman 2000) to pick up any emerging evidence thus applying the

grounded theory approach (Dawson 2002)

39

31 Research Setting

Mauritius is a volcanic island of lagoons and palm-fringed beaches in the

Indian Ocean Southern Africa east of Madagascar with a population of

about 12 million has a reputation for stability and racial harmony among its

mixed population of Asians Europeans and Africans The island has

maintained one of the developing worlds most successful democracies and

has enjoyed years of constitutional order since independence in1968 Over

the past three and half decades the country has been transformed from one

of the poorest in the world to a middle income country with per capita Gross

Domestic Product US $7000 (World Bank 2006) It has preserved its image

as one of Africas few social and economic success countries that mainly

depends on sugar and clothing export and a centre for upmarket tourism But

Mauritian exports have been hit by strong competition from low-cost textile

producers and the loss of sugar subsidies from Europe Consequently

attention has turned to diversification in line with global trends

To this end SMEs have been identified as important instruments to achieve

economic diversification Today the government vigorously supports SMEs

through a range of strategies eg the creation of a business friendly climate

via import liberalisation tax reforms and the launch of the SME Partnership

fund which gives subsidized loans to aspirant SME owners and makes the

availability of finance and facilitating access in particular for those enterprises

that have viable projects but are short of equity The Small Enterprises amp

Handicraft Development Authority (SEHDA) was created following the merger

of the Small amp Medium industries Development Organisation (SMIDO) and the

National Handicraft Promotion Agency (NHPA) The aim of the merger is to

40

rationalize and optimize the use of resources dedicated to the small business

sector in Mauritius

Various cultures and traditions flourish in peace though Mauritian Creoles

descendants of African slaves who make up a third of the population live in

poverty and complain of discrimination Mauritius was uninhabited when the

Dutch took possession in 1598 Abandoned in 1710 it was taken over by the

French in 1715 and seized by the British in 1810 The culture of the country

reflects its diverse ethnic composition There are many religious festivals

some important ones being (in random order) Divali (the hindu festival of

lights in October) Christmas Cavadee (a penitence festival of the south

Indian tradition of hinduism in January) Eid ul Fitr (celebrating the end of the

period of fasting in Islam As the Islamic calendar does not correspond to the

Gregorian calendar the date of its celebration in the year tends to vary In

2003 it was celebrated in November) With such a strong history diverse

culture and such a promising economy painted above makes Mauritius a rich

setting to investigate culture and small medium business entrepreneurship

32 Methods

As justified already this study applied method mix to exploit the benefits of all

methods used while minimising the effects of their weaknesses The obvious

benefit of method mix is that it involves more data which is likely to improve

the quality of research (Denscombe 2003) and that is what the researcher

sought to achieve In deciding which method to use it was acknowledged that

the chosen methods were not superior in any way but more suited to the study

41

circumstances based on the premise of ldquohorses for courses (Denscombe

2003 page 83)

A Questionnaire used in the online web survey allowed for collection of

data from large numbers of participants economically since the project had

financial and time limitations (Ibid) The other advantage of survey exploited is

generation of quantitative data However weaknesses of the method

(empiricism lack of depth and accuracy of responses) were a challenge The

questionnaire was open ended and was completed by the participant in the

absence of the researcher Any questions arising from the participant not

understanding or misinterpreting the question where not taken care of Focus

groups were used to gain depth into some of the emerging issues from

questionnaires to gain insights into the issues surrounding widow inheritance

and to validate some of the data (Denscombe 2003) Telephone and face to

face interviews were used to gather to gain in-depth information on the

issues

All accessible literature on culture and investment in Mauritius as well as

other parts of Africa was reviewed to get insight into any related work to

identify key issues and current knowledge gap so as to sign post this study for

any audience (Ibid)

42

33 Research Participants and sampling

It was difficult to get exact demographic data for each sector Consequently it

was not possible to use any scientific sampling techniques The study

therefore used non-probability sampling (Neuman 2002 Bowling 2002

Denscombe 2003) targeting urban based population

The sample baseline characteristics were

SME managers from aged 18 years and above and over 65 was the

limit Any religion faith Any socio-economic background and residents

of Port Luis and surrounding areas

To sample for quantitative data purposive and snowballing sampling

techniques were used because it was not possible to apply any statistical

formula in getting the samples since there was no single list of SME managers

and other stakeholders to use with any form of probability sampling

Participants were snowballed from one sector to another until the whole

sectors were covered For the focus groups homogenous and critical case

(Grbich 1999) sampling was used to get particular sub group to provide

details In this case to get government officials and the private sector who

were strong enough to talk about their experiences

A total of 161 participants were reached from all the sectors These included

SME manager government officials and the private sector The researcher

wishes to point out that these numbers were not conclusive The numbers

could be much higher because in case the researcher phoned the participants

they were not available to take the call there was no time to go back to

43

ascertain the details Those who were not willing to take part in the study were

also excluded from the above figures For the focus groups discussions 5

government officials and the private widows were invited and used Skype

technology to do a conference

The times when the participants were contacted met were entirely dependent

on participant availability and other events at the time (Gilbert 2001) It varied

between 800 am and 700 pm in the evening because of the time differences

UK and Mauritius time Care was taken to avoid compromising times such as

late in the evening or culturally sensitive days such as weekends when people

were engaged in funerals and church services in this case

The participants showed weariness towards the study because as they put it

ldquoa lot of people come along claiming to collect data to help but never show up

againrdquo

34 Data collection Instruments

The researcher developed an online quantitative data collection questionnaire

(web survey form) which was posted on the university web server with help of

the department technicians A multiple recipient list was created from the

details in the SEHDA website and was randomly sent to the recipients These

only included the SME managers from the seven sectors About 20 contacts

were selected from each sector which made a total of 140 participants

Telephone interviews were made to about 17 government officials and the

private sector who were later divide n to focus groups and a teleconferencing

44

was organised on Skype Face to face interviews were done with government

officials from the Mauritian High Commission in the UK

Apart from the questionnaire an Olympus VN 2100 PC Digital Voice Recorder

was also used during the focus group discussion with the permission of

participants also on telephone interviews and face to face interviews This

was tested set and correctly positioned by the telephone speaker before the

session began to ensure proper functioning It was fitted with a mini

microphone to improve recording quality The digital voice recorder small in

size (only 68 grams in weight) proved user friendly because it was not

intruding too much into the face of participants as opposed to older recording

devices There was a pair of AAA batteries on standby in case the batteries in

use ran flat during the session

35 Ethical Considerations

This study involved very little of sensitive issues but it strived very much to

adhere to the fundamental principles of Human Research Ethics of Respect

for Persons Beneficence and Justice The researcher ensured autonomy self

determination and protection of vulnerable persons through informed consent

participation confidentiality and thorough explanation of what the research

was all about to those with limited knowledge and education Any risk that

might have resulted from the study was minimised as much as practically

possible and the researcher took full responsibility for the protection of

participants There was no form of discrimination other than on participant

baseline characteristics

45

The study also upheld the six key ethical research principles as stipulated by

ESRC - UK (ESRC 2005) To ensure anonymity pseudonyms were used for

participants The information gathered was safely protected through password

use on the computer system and only the researcher had access to the

information The researcher was responsible for storage and destruction of

any information no longer needed such as audio files after transcription

Research respondents participated in a voluntary way free from any coercion

and free to withdraw at any point should they felt uncomfortable

The first ethical committee whose approval was sought was the University of

Sheffield Ethical committee after which the researcher sought ethical approval

from Mauritian authorities through the relevant ministries It was not straight

forward getting ethical approvals in Mauritian but ultimately the ministry of

SMEs approval was obtained

36 Procedure

After all the necessary approvals were obtained the researcher wrote an

explanatory letter (Grbich 1999) or bdquoparticipant‟s information sheet‟ (appendix

5) which included information on informed consent (Denscombe 2003)

After piloting the tools the researcher started by making calls to make

appointment for interviews As the quantitative data collection went on

recruitment of participants to take part in qualitative aspect was done

simultaneously due to time constraints The researcher used individual

judgement to asses those participants who would be courageous enough to

respond to the questionnaire online and to the interviews The managing

46

director for RCBusiness Support Ltd also provided a number of potential

respondents who were used at the initial stages of the study Each interview

session lasted averagely 50 minutes The researcher went to organise the

teleconferencing for the focus group on Skype which also lasted for average

50 minutes

37 Data Analysis

Since the distinction between quantitative and qualitative research is not

watertight (Denscombe 2003) data analysis embraced both because they

have similarities and differences (Neuman 2000) There was analysis of

words and numbers thus holistic versus specific focus (Denscombe 2003)

The analysis adopted a five stages approach (Denscombe 2007) The first

stage was data preparation followed by data exploration analysis

presentation and finally validation

Though some researchers champion for advanced inferential statistics

(Denscombe 2007) the researcher opted for descriptive statistics for the

quantitative data analysis because they still remain effective ways of data

analysis and presentation (ibid) The research data involved nominal as well

as discrete and continuous data which could effectively be analysed using the

chosen method The data was grouped frequencies were described and

finally any linkages were identified The end product of the analysis process

is presented in the results section in various formats Basic statistical

techniques were used to give the data additional credibility in terms of

interpretations of the findings (Denscombe 2007)

47

For the qualitative data the first thing was to back up the original voice

recorded focus group discussion into a password protected lap top This

ensured not only the security of the data but also a back up in case of data

loss The researcher then listened to the recording several times to familiarise

himself with the data after which transcription took place After that the data

was interpreted and categories themes were identified since thematic

analysis was employed The Putz (2000) model was used as a guide to

finding themes The findings are presented in the results section

38 Planned programme of dissemination

The study findings were disseminated to all relevant stakeholders in print

format including the university as part of the postgraduate degree requirement

in academically fulfilling format Two copies of the report were sent to the

Ministry of SMEs in Mauritius and two copies to the Board of Investment of

Mauritius in the UK as part of the requirements of ethical approval and

research permission granted by the ministry

Finally it was hoped that the report would meet publication requirements so

that it could get a wider audience through a reputable journal

48

39 Time scale

The study was anticipated to take the following breakdown from the time all

ethical approvals and consent were obtained

Table 1 Table showing the study time scale

Stage Time allocation Action item Accountable person

I Weeks 1 - 3 Research set up Sampling and

access to participant negotiations

Angelinah Boniface

II Weeks 4 - 12 Data collection and Analysis Angelinah Boniface

III Weeks 12 - 16 Analysis Report writing and

dissemination

Angelinah Boniface

310 Limitations and Delimitations

This study was not fully funded as such high telephone costs travelling

affected the exercise Only business people in Mauritius both men and women

were interviewed The study covered both local and foreign investors

Participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

49

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

A major limitation is a low response rate of the questionnaire and therefore a

representative sample of the SME population was not achieved Thus any

conclusions made from the analysis of the collected data cannot be

generalized to the broader SME population Bias may have been inadvertently

introduced during interviewing caused from such things as leading questions

50

CHAPTER 4

RESEARCH FINDINGS AND DISCUSSION This chapter aims to discus the research findings from the study The chapter

is divided into two sections the first part presents and discusses the

quantitative data and the second part discusses qualitative It is therefore

worth mentioning that the Putz (2000) model was used to guide the

qualitative data analysis and some of the themes were taken from the model

and some were generated from the research findings It must be noted that

any findings uncovered from this study cannot be generalized to the broad

public domain regarding SMEs

Section A of the questionnaire and the interview guide included questions that

collected background information on the SME managers and the responding

firms These data constitute the substantive material for analysis in the

ensuing sections The tables below depict the socio demographic

characteristics of the survey participants age group gender educational level

and experience as ownermanager In the following sections there aspects

are discussed

51

41 RESPONDENTS RATE ACCORDING TO SECTORS

TABLE 2

SECTOR SEHDAS SURVEY SENT

SURVEY RECEIVED

RESPONSE RATE

Leather and Garments

1678 20 12 60

Wood and Furniture

2196 20 11 55

Paper Products and Printing

1541 20 9 45

Chemical Rubber and Plastic

1376 20 11 55

Pottery and Ceramic

793 20

17 85

Jewellery and Related Items

1674 20 13 65

Fabricated Metal Products

1267 20 14 70

TOTAL 7 140 101 72

Table 2 shows the response rates from various sectors of SME in Mauritius

which were targeted by the online survey As the table indicates pottery and

ceramic sub sector had the highest response rate (85) with paper products

sector giving the least response rate (45) Overall 72 response rate from

all the targeted sectors was satisfactory It is worth mentioning that the total

number of participants adds to 140 since this question was only directed to

sectors not to other stakeholder in the research sample

52

42 DEMOGRAPHIC PROFILE PARTICIPANTS

TABLE 3 AGE GROUP AS PER PARTICPANT

AGE GROUP FREQUENCY PERCENTAGE

-25 7 43

26-35 34 211

36-45 53 329

46-55 35 217

56-65 22 137

gt 65 11 63

TOTAL 161 100

Evidence from most of entrepreneurial literature suggests that self-

employment becomes an increasingly attractive option as one nears middle

ages As can be seen in table 3 respondent‟s ages ranged from 25 to 65 and

the largest proportion (329) of the participants was in the age range of 36ndash

45 Additionally participants were biased towards the age ranges of between

36 and 65 and away from the under 25 and over 65

TABLE 4 GENDER PROFILE AS PER PARTICIPANT

GENDER

Male 116 720

Female 45 280

TOTAL 161 100

53

In relation to gender the research sample was predominantly male (72) a

striking although unsurprising demographic characteristic that reflects the

composition of the larger business sector in the country as a whole

Consequently only (28) were females This is clearly illustrated in table 4

above

TABLE 5 EDUCATION PROFILE AS PER PARTICIPANT

EDUCATIONAL LEVEL

Primary 8 50

Junior-level 29 180

O-level 78 484

Diploma 34 211

Higher Degrees 12 75

TOTAL 161 100

As evident from table 5 the educational levels attained by respondents varied

considerably as follows Primary School Certificate (8 or 5) Junior

Certificate (29 or 180) Ordinary Level (78 or 484) Diploma (34 or

211) and higher Degrees (12 or 75 ) On the whole though the data

suggest that the educational levels of our respondents are low the largest

proportion (398) possessing an Ordinary Level certificate

54

TABLE 6 YEARS EMPLOYED AS CEO AS PER PARTICIPANT

Years Of Employed as CEO

0-3 44 273

4-7 88 546

8-14 15 94

15-19 11 68

Over 20years 3 19

TOTAL 161 100

Not surprisingly table 6 shows that most of the responding executives did not

have education that emphasized a business curriculum This can be

understood with respect to the Mauritian educational curriculum which largely

overlooked business subjects until very recently

The research sample participants had been employed at their current firms on

average 1467 years and had an average of 12 years experience in the

manufacturing industry Four predominant job titles used by the senior

executives emerged from the questionnaireinterview responses Managing

Director (38) Director (26) Manager (20) and Chief Executive Officer

(16)

55

43 CHARACTERISTICS OF RESPONDING FIRMS

This section presents the descriptive statistics of the responding firms The

description focuses on age of the firm employment size firm revenues and

firm ownership

TABLE 7 COMPANY AGE PROFILE

Age of Company Frequency Percentage

1- 3 years 44 314

4- 6 years 68 486

7-10 years 19 136

11-15 years 7 50

Above 15 years 2 14

TOTAL 140 100

Table 7 displays the statistical data Of the firms responding the largest

proportion (486) was 4 to 6 years old Overall the sample reveals a skewed

distribution towards the ranges between 4 and 15 Also it is interesting to note

that 915 of the responding firms are mature that is beyond the start-up

phase

TABLE 8 EMPLOYEE PROFILE AS PER PARTICIPANT

Number of Employees

50-99 101 721

100-200 39 279

TOTAL 140 100

56

Unsurprisingly the vast majority of the responding businesses had fewer than

100 employees as depicted n table 8 with the largest proportion (701) in

the 50ndash99 employee categories The study found out that most small

companies would opt to have family and relatives as employees to minimise

costs Only 32 average of the firms were medium-size The preponderance

of small firms in the sample mirrors a more general pattern of firm distribution

in the country where medium and large firms are a conspicuous small

minority

TABLE 9 ANNUAL SALES AS PER COMPANY

Annual Sales

Less than R100 000 88 629

R101 000- R250 000 36 257

R251 000- R15 million 11 79

Above 15 million 5 35

Total 140 1000

As shown in table 9 the largest proportion of responding firms 88or 629

achieved a turnover below R10000000Only scant 11 or 79 posted annual

revenue in excess of R15 million

57

TABLE 10 OWNERSHIP AS PER PARTICIPANT

Ownership

Wholly Citizen 76 550

Joint Venture 42 293

Foreign Owned 22 157

TOTAL 140 100

Regarding ownership table 10 shows that an overwhelming majority or 550

of firms were wholly citizen-owned while the remaining 293and 157

were joint venture with citizen stake and foreign-owned respectively

44 Language

From most of the participants investors do not have to learn Local Mauritius

language since English and French are the official languages in the country

Since most of the investors to Mauritius are either English or French speaking

language as such is not a barrier to business practices and success for

prospective investors

ldquohellipwell it is not very important for foreign investors to learn languages

spoken in Mauritius because we can speak both English and Frenchrdquo

[Participant A5]

ldquohellipactually language is not barrier to English or French speaking investorsrdquo

[Participant A21]

58

Language is perhaps the most complex and perplexing aspect of the

Mauritian social mosaic (Rassool 1996) Contrary to the results that show that

language is not a problem for investors since most of the investors who come

to Mauritius are English or French speakers who normally fits well in the

society since these are the two official languages

This intricacy derives from the number of languages spoken combined with

the uses to which they are put and the socio-political connotations they bear

Baker and Stein (1977) scholars studying language use in Mauritius have

found that English is associated with knowledge French with culture

Creole with egalitarianism and other languages ancestral heritage

Consequently although Creole is the most widely spoken language in the

country French predominates in the media and English is the official

language of government and school instruction (Stein and Baker 1977)

According to the 1983 census the top five languages were Creole 541

Bhojpuri 204 Hindi 115 percen French 37 and Tamil 37 These

figures indicate the principal language used in the home Most Mauritians

however speak several languages

Literature suggests that global organizational structures need to adopt

common rules and procedures in order to have a common bdquolanguage‟ for

communicating across cultural borders (Kostova 1999 Kostova and Roth

2003 Gupta and Govindarajan 2000) This is directly reflected by the results

above that foreign investors need not to learn the local language of locals but

its important to create a common language within the organisation that is

59

understood by all stakeholders in the organisation for effective and efficient

communication

45 Religion

The study found that main religions in Mauritius are Hindu Muslim and

Christianity to a lesser extent Hindus make up approximately half of

religiously affiliated Mauritians Of the remaining Mauritians approximately a

third are Christians and about 15 Muslim followed by small Buddhist and

Sikh communities It is therefore imperative that a foreign investor considers

religion of the people of Mauritius before setting up a business Religion

The study also found out that various religions found on Mauritius tend to play

a major part in the islands cultural events and churches temples and

mosques are to be found everywhere Hindu and Tamil celebrations are part

of Mauritian cultural life

ldquohellipFestivals such as Divali (the festival of lights) Holi (in which participants

are covered in colourful powders) and Thai Poosam in which Tamil devotees

pierce their bodies with masses of needles as an act of penance are

popularly attended by Mauritianshelliprdquo [Participant A60]

ldquohelliphellipthere are also a number of diverse practices and superstitions

originating in beliefs brought from Africa and Asia Local sorcerers known as

longanistes or traiteurs are sometimes called in to settle arguments exact

revenge or administer love potionshelliphelliprdquo [Participant B41]

60

However all communities live together in harmony with each other regardless

of religion the study learnt

hellipHarmonious separatism is how we characterise our communal relations

in Mauritiushellip [Participant A13]

Since all citizens are ldquodescendants of slavery there are no tribes unlike

other African countries This has made integration and assimilation easier and

it makes it very easy for any SME to adapt to the local conditions due to pre

existing harmonyrdquohellip [Participant A13]

It is worth noting that businesses remain closed in public religious days but

the purchasing power remains the same regardless of whether it‟s a public

holiday or not

ldquohellipthe demand is not dependent on whether itrsquos a holiday or nothelliprdquo

[Participant A11]

ldquohellipit doesnrsquot matter really whether its holiday or religious holidayhelliprdquo

[Participant A21]

According to Stein and Baker (1977) the Mauritian society is noteworthy for

its high degree of religious tolerance Mauritians often share in the

observances of religious groups other than their own In part as a result of the

multiplicity of religions Mauritius has more than twenty national holidays In

addition the government grants subsidies to all major religious groups

61

according to their membership (Stein and Baker 1977)This is also evident

from the results of the research

Ethnicity religion and language have been important factors in shaping the

way Mauritians relate to each other in the political and social spheres Despite

the fact that sectarian factors are less of a determining factor in peoples

social and political behaviour they remain an important clue to the peoples

past and self-identity (Rassool 2001) As a foreign investor understanding

the religious belies of a society and taking all the necessary details in to

consideration play a major role in an international business environment

setting (Hosftede 1980) For example observing religious holiday and making

sure employees get days off and annual leaves on such important days

having prayer rooms for those willing to pray at work and creating a non-

discriminatory environment for all employees

It is worth mentioning that while religion does not have a direct impact on

Mauritius investment since it an international business hub However it is

important for investors to take note of all the aspects of religion since it plays a

very important role in lives of the Mauritians For example there are religious

holidays as an employer it is important to follow the religious holiday calendar

and give annual leaves to employees on such important days

46 Social Life

For the interest of prospective investors the study found that the social life in

Mauritius is very much close to families and friends People all meet at open

markets for normal shopping and socialise over weekends ldquoeven ministers

62

managing directors of big companies go to open marketsrdquo [Participant

A12]

There is no busy night life in the country as well as cinema and theatres

because most people prefer home video entertainment ldquoMost people found at

social places like cinemas pubs clubs etc are employees and not

employersrdquohelliphellip [Participant A12] Prospective investors should therefore

know that they are likely to meet business associates at board rooms or at

their offices rather than at social centres

In a society where tolerance is a national virtue and ethnic conflicts are

invisible to the casual visitor it takes time to learn the dos and donts of

socialising ldquohelliphere in Mauritius you must realize that we walk on eggs

continuouslyhelliprdquo [Participant B36] For a peaceful and tolerant as Mauritius

undoubtedly is the diverse groups populating the island do not collectively

make up a nation Mauritius like any other island is a nation of nations and

compromise is the order of the day be it in politics in the economy in the

media or at a dinner party the study found

The study found out that unlike other African societies Mauritius people would

prefer to stay at home and watch movies play video games with kids or visit

friends and relatives to socialise or for a night out There are not many social

night clubs in Mauritius as compared to the United Kingdom ldquohellipmany homes

today have a Digital Video Decoders (DVD) sets and donrsquot see the importance

of going out to cinemas and would helliphelliphelliprdquo [Participant A12]

63

This does not come as a surprise since literature suggests that Mauritius

though it is multicultural society and an international hub for business there

are a quiet peaceful and tolerant nation and would prefer to keep their space

(Stein and Baker 1977)

47 Market Accessibility

The study found that as first foreign investor Mauritius government has open

market programme When the free operational zone initiative began investors

imported raw materials imported duty free and foreign companies had to

show transformation of raw materials into fished exports since the

government‟s aim was to increase exports thus improve balance of trade

However in the early stages the initiative did not work as expected because

of certain barriers

Lack of adequate government incentives to lure more investors

Too much repetition meaning most of the companies where doing the

same thing

Lack of skilled human resources

The scenario is summarised by participant B3 in the following

statementldquohelliphellipour people did not have culture of businessrdquo

For more access to the markets further initiatives were put into place The

government assured investors of freedom of capital movement that is the

investors were guaranteed that they would bring their money into and out of

the country whenever they felt like doing so In addition the government

64

embarked on providing more facilities (industrial buildings) and infrastructures

all over the country opening up rural areas because towns already had

infrastructures Lastly first time investors were provided with free access to

customs thus maintaining the earlier option of tax free imports

While Mauritius was doing all these events elsewhere in the world played to

their favour European Union and USA were imposing import quotas on

Chinese and Indian imports to prevent damping So these investors had to

look for alternative markets and Mauritius turned out to be one of such

markets But the government had to act quickly to avoid bdquotransit investors‟

ldquohellipthey are investors who want to do business when it favours them but when

they begin to loose certain privileges or profits get diminished then they take

offrdquohelliphellip [Participant B3]

To avoid this foreign investors were made to transfer skills and knowledge to

local community which led to emergence of Mauritius community of

manufacturing

ldquowho started from easy stitching like socks pyjamas bras etc and later

upgraded to big Mauritius labelshelliprdquo [Participant B3]

The study further found that the initiative did not stop there The government

further established Mauritius Enterprise Development Investment Authority

(MEDIA) in 1985 which took lead in looking for prospective investors from

65

Europe USA Hong Kong and India among others Any willing investor was

transported to Mauritius and accommodated freely on government accounts to

tour the country and carry out investment feasibility studies This helped to

popularise the investment opportunities in Mauritius and attracted many more

investors Currently MEDIA has been transformed into Mauritius Board of

Investment which is no longer in charge of managing industries but

ldquopromotes Mauritius businesses abroad and participates in trade fairs to

further open uprdquo [participant B3]

The study also found out that there are specific niche markets for foreign

investment in Mauritius namely the Offshore Industry the Financial Industry

the Construction and Tourism especially in the area of high class luxury

property market in form of villas hotels and apartments and of recent the

Information Technology (IT) industry These industries cover a large spectrum

including SMEs

ldquohellipone of these sectors makes a very good investment for any investor

especially the construction industryhelliprdquo [Participant A89]

The results agree with Putz (2000) which notes that niche markets make

establishing a business by immigrants easier because the immigrants needs

for consumer goods create a specific demand This is evidence by all the

incentive the Mauritian government have put in order to attract foreign

investors in to country for the benefit of the Mauritian population Furthermore

Putz (2000) emphasise the opportunities offered by the host country including

66

access to the market and job market conditions as important factors for

international business

48 The role of ICT to SME business in Mauritius

The study found that Mauritius has a very well established ICT sector It has

formed the backbone of SME success in Mauritius As early as 1990 the

country provided hellip ldquothe fastest broadband in the world to help SME business

investors who were each allocated free 2MB internet accessrdquohellip[Participant

A 23] Recently the government has in turn invested a lot of money in

developing a cyber city a few kilometres away from the capital Port Louis

which will form the hub for future investments

This high level of ICT development in the country has created SME in areas

such as offshore financial services calls centres and enhanced tourism

industry growth Any prospective investors are guaranteed of highly

developed ICT backed up by highly qualified local human resources The

offshore investment sector has even been further boosted byhellipldquobilateral

agreements with India allowing companies registered in Mauritius to transfer

funds to India tax freerdquohellip[participant B13]

It is hoped that in helliprdquo5 years time the whole island will have free wifi

connectivityrdquo participant B33 The country not only makes use of its advanced

ICT sector but has become a big player in the region as well For example

Mauritius state informatics computerised South African government in 1996 It

has also won other computerisation contracts in Zambia Zimbabwe Namibia

Kenya and Ghana To sustain such success ldquopartnerships have been formed

67

with global players such as Microsoft to provide training not just to Mauritius

nationals but other scholars from the South Eastern Africa region as

wellrdquohellip[participant B13]As matter of fact the government of Mauritius has

invested billions in building s cyber-city a few miles aware from the capital

Port Louis

ldquoits opening in July this year and it is expected to be the centre of attraction

for investorsrdquo [Participant B13]

ldquoactually the government invested in this cyber-city with the intention to

attract European and American investorsrdquo [Participant A6]

From these results there is evidence that technology plays a major role in

SME development Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

68

48 Governance and the role of women in SME sector

in Mauritius

Mauritius is a multicultural country with ldquo70 of the population of Chinese

Indian ancestry 2 white French origin and the remaining mixed race ndash

creolesrdquo [participant A17] Europe has not have a lot if cultural influence on the

country and predominant cultures are Asian African cultures Study found

that common folklore popular songs in Mauritius would also be ordinary

found on other African countries such as Senegal Mozambique Cameroon

and Sierra Leone among others signifying deep rooted African traditions

The government maintains ndash discrimination laws for either gender In the early

stages of SME development women provided the bulk of the labour in the

rural areas as industries moved away from cities into the rural areas There

are concerted efforts to get women into jobs especially leadership roles

ldquowomen themselves are too slow to act and take advantage of the

government incentivesrdquo

The study found out that woman in Mauritius do not occupy positions of

strategic power decision making This is not a surprise because it is the same

with most Southern African countries The government of Mauritius has put a

lot of structures to support women in business but women are taking it slow to

utilize these structures

69

There are many government agencies and organizations headed by women

and even cabinet posts but most women would rather stay out of politics

becausehelliphellipldquopolitics can get very dirty involving personal lives of politicians

which men donrsquot mind but women do mind a lot aboutrdquohellip[participant A 17)

However in other sectors like education and healthcare there are many

women represented in the labour force

The study also found out that just like any other society one can not ldquohellipstop

some kind of abuse for both males and females There are cases of both

female and male harassment but the law comes in to protect such victims

There are also cases of petty crime and rape involving women either as

perpetrators or victimsrdquohellip [Participant A13]

According to AllAfrica Global Media (2008) the winds of change are blowing

across the island of Mauritius and many men in this traditionally conservative

nation are working hand in hand with women to see that the common sense of

gender equality prevails The absence of women at the decision-making table

usually means the absence of their priorities and needs Irrespective of the

Southern African Develoment Community (SADC) Declaration there are so

few women in politics This is evident from the results of the study which found

that women will rather do health jobs and education than to play the dirty

tricks of politics

Women councillors make up a mere 37 in the Moka-Flacq District Council

This is the lowest figure not only in Mauritius but also in the SADC region

70

This is far from the 2005 30 target not to mention the 50 goal now being

set for the region and included the draft Protocol on Gender and Development

up for review at the August SADC Heads of State Summit ( AllAfrica Global

Media 2008)The results found out that there is also a few representations of

women in business Women do mostly the dirty jobs of caring for children and

their families and do not have the courage to enter the business sector This is

not surprising especially in the SADC region women play the minority role

and are rarely represented at the strategic decision making level hence their

needs are always neglected resulting in women poverty

49 Challenges faced by the country and hence SME investors

Stiff competition from other countries such ashelliphellipldquoBotswana Vietnam and

South East Asia in the textile industry due to cheap labour Maldives and the

Caribbean Islands for tourism difficult in Training enough qualified personnel

in ICT to cope with demand International competition and access to fundsrdquo

hellip[participant B13]

To face these challenges the study found that the country has expanded

tertiary education and formed partnerships with foreign universities such as

ldquoFrench Scientific University which has been running Medical school in

Mauritius for 10 years By the time of this study an agreement had been

reached by Thames valley university (UK) to open up campus in

Mauritiusrdquohellip[participant B15] The aim of the government is to offer high

quality education to students from the region as well as far away like China at

affordable cost and to compete with European universities Further to

71

educational development the study also found out that the country is striving

to create partnerships with ldquoresearch organisations and to create high quality

healthcare so as to benefit from health tourism where would just travel to the

country to get affordable high quality specialised health carerdquohelliphellip [Participant

A3]

Finally results show that there is stiff competition from different sectors of

business and other force which needs to be taken into consideration when

doing business internationally Globalization tends to redistribute economic

rewards in a non-uniform manner a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) It essential to know all

the factors surrounding the business sector and understanding all the

business practices before investing to avoid any loss

72

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

Research on culture and IB is definitely a bdquogrowth‟ area because the business

world is in many ways becoming one The researcher concluded the following

based on study findings

Firstly the cultural diversity and harmony of the island make Mauritius a

unique place in the world It is also known for its social peace political stability

and racial harmony Its steady economic growth over the years coupled with

its nation‟s social cohesion and prosperity ensure continuing development

Secondly Mauritius enjoys a literacy rate over 80 percent Skilled labour

graduates and qualified professional including lawyers engineers IT

programmers consultants accountants and chartered secretaries are

available to suit virtually all business needs in two international languages

English and French Language is therefore not a barrier to foreign investment

In addition academic training at the University of Mauritius and the newly

established University of Technology a comprehensive system of vocational

training through the Industrial and Vocational Training Board (IVTB) ensures a

ready supply of skills in a number of fields such as tourism engineering

electronics jewellery ICT printing and textiles

Thirdly In view of the importance of foreign investment as a source of

sustenance to economic growth the government of Mauritius has taken a

series of policy measures to encourage its flows into manufacturing offshore

73

banking and financial services information technology communication and

tourism As far as foreign investors are concerned Mauritius offers itself as an

attractive destination because several positive features such as political

stability availability of skilled labour and investment-friendly rules and

institutions

Fourthly after a sustained growth path over the last three decades based on

sugar textiles and tourism Mauritius is now shifting gears to move towards a

higher stage of economic development so as to consolidate its position as a

premier international hub Foreign Direct Investment (FDI) has played an

important role in the development of Mauritius and will again be decisive when

the country embarks on high value-added capital intensive and knowledge-

based activities

Fifthly the government plays the role of a facilitator and has endeavoured at

all times to create the most conducive investment environment by enacting

appropriate legislations building state-of-the-art infrastructure investing in

human capital and introducing packages of investment incentives for the

manufacturing financial services and ICT sectors so as to enhance the image

of Mauritius

In this respect the Board of Investment (BOI) is the first contact point for

anyone investing in Mauritius Operating under the aegis of the Ministry of

Finance the BOI was established in March 2001 under the Investment

74

Promotion Act to give a new impetus to foreign direct investment The BOI is

the apex organization for the promotion and facilitation of investment in

Mauritius The primary role of BOI is to stimulate the development expansion

and growth of the economy by promoting Mauritius as a competing business

and service centre It aims at streamlining the legal framework and to make

better provision for the promotion and facilitation of investments in Mauritius It

acts as a facilitator and provides a one-stop shop service to both local and

foreign investors ensuring reliable and speedy processing of applications The

BOI receives processes and approves all applications for investing in

Mauritius It also assists investors in obtaining the necessary secondary

permits and clearances from relevant authorities thus ensuring a speedy

implementation project

Six Mauritius pursues a liberal investment policy and actively encourages

foreign direct investment in all sectors of the economy Attractive packages of

both fiscal and non-fiscal incentives tailor-made to the needs of each priority

area of development are offered to investors Excellent opportunities for

investment in Mauritius exist in various sectors of the economy including

manufacturing information technology knowledge industry regional

headquarters tourism and leisure financial services Freeport activities

amongst other sectors Some of the priority areas are in Information and

Communication Technology which is set to a play a lead role in the economic

development of the country in the medium and long terms The availability of

high bandwidth connectivity (with SAFE Project and international Gateways)

at near global parity in quality and tariff on the one hand and the setting up of

75

dedicated IT habitats including the Cyber city at Ebeacutene on the other hand

plus total Government support to this industry are testimony of the importance

of this industry to Mauritius Others include the manufacturing sector textiles

and apparel the spinning sector electronics and light engineering medicals

and pharmaceuticals agro-business leather products and jewellery and

watches

The export-oriented manufacturing sector has been the backbone of the

Mauritian economy for the past three decades This sector remains a major

constituent of the Mauritian economy in terms of foreign exchange earnings

employment and contribution to GDP and is called upon to continue to play

an important role in the consolidation and diversification of the industrial base

of the country certain

Lastly some incentives provided by government to foreign investors In the

manufacturing sector these include among others

No customs or duty or sales tax on raw materials and equipment

No tax on dividends

No capital gains tax

Free repatriation of profits dividends and capital

50 relief on personal income tax for expatriate staff

New incentives for the ICT Sector consist inter alia of

the availability of tax holiday up to year 2008 for specified

pioneering high-skills ICT operators typically geared towards the

export market such as software development multi-media and to

high-level ICT training institutions

76

customs duty-free import of ICT and similar equipment

50 relief of personal income tax for a specified number of foreign IT

staff

duty-free import of personal belongings of foreign IT staff

effective fast track procedure for procession of visa and work

permits for foreign staff including spouses

From the above the research concludes that Mauritius being a multicultural

society as it is the culture they share does not have a direct impact on

investment in Mauritius because of it is an international hub for business It is

also expected that from the results the situation is not going to change after

time but will keep in this shape for a long since it is the government incentive

to attract more investors into the country However there are certain aspect of

culture eg believes that foreign investors need to understand and take into

consideration This study recommends any prospective investor to make good

investment in to Mauritius without fear

77

CHAPTER SIX

REFLECTIONS FROM THE STUDY

The views derived from this study might not be directly applicable to the whole

region because of variations in socioeconomic settings in various parts of the

Mauritius Also views expressed in this study were obtained mainly from

urban based managers and respondents and might not be similar to rural

based SMEs from the same community or area

Some scholars might not support the sampling techniques used but they

were the most practicable given the circumstances

Legal practitioners in Mauritius were supposed to be part of the sample but

they were hard to reach with some declining to participate

Demographically and geographically the sites were larger than anticipated

given the time and resources available for the study

Lastly the study was limited to the previous 20 years which might have

yielded same generational trend missing the opportunity to get data across

various generations within the sites

78

CHAPTER SEVEN

FUTURE RESEARCH

With more funding and resources a similar study could be conducted

throughout a wider geographic region and encompassing all categories of

SMEs micro small and medium Furthermore with more time a greater

number of interviews could be conducted which would provide richer data that

would be more in depth for conclusive analyses to be made Additionally

participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

79

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

WORD COUNT 16 969

80

APPENDICES APPENDIX 1 MauritiusData Profile

2000 2005 2006

World view

Population total (millions) 119 124 125

Population growth (annual ) 10 08 08

Surface area (sq km) (thousands) 20 20 20

Poverty headcount ratio at national poverty line ( of population)

GNI Atlas method (current US$) (billions) 444 653 681

GNI per capita Atlas method (current US$) 3740 5250 5430

GNI PPP (current international $) (billions) 891 1239 1334

GNI per capita PPP (current international $) 7510 9970 10640

People

Income share held by lowest 20

Life expectancy at birth total (years) 72 73 73

Fertility rate total (births per woman) 20 20 20

Adolescent fertility rate (births per 1000 women ages 15-19) 39 40 41

Contraceptive prevalence ( of women ages 15-49)

Births attended by skilled health staff ( of total) 100 99

Mortality rate under-5 (per 1000) 18 15 14

Malnutrition prevalence weight for age ( of children under 5)

Immunization measles ( of children ages 12-23 months) 84 98 99

Primary completion rate total ( of relevant age group) 105 97 92

Ratio of girls to boys in primary and secondary education () 98 100 103

Prevalence of HIV total ( of population ages 15-49) 06

Environment

Forest area (sq km) (thousands) 04 04

Agricultural land ( of land area) 557 557

Annual freshwater withdrawals total ( of internal resources)

Improved water source ( of population with access) 100

Improved sanitation facilities urban ( of urban population with access) 95

Energy use (kg of oil equivalent per capita)

CO2 emissions (metric tons per capita) 23

Electric power consumption (kWh per capita)

Economy

GDP (current US$) (billions) 447 629 635

GDP growth (annual ) 40 46 35

Inflation GDP deflator (annual ) 37 48 41

Agriculture value added ( of GDP) 6 6 6

Industry value added ( of GDP) 31 28 27

Services etc value added ( of GDP) 63 66 68

Exports of goods and services ( of GDP) 63 57 60

Imports of goods and services ( of GDP) 65 61 67

Gross capital formation ( of GDP) 26 23 25

Revenue excluding grants ( of GDP) 220 214 215

Cash surplusdeficit ( of GDP) -11 -21 -30

States and markets

Time required to start a business (days) 46 46

Market capitalization of listed companies ( of GDP) 298 416 567

Military expenditure ( of GDP) 02 02

Fixed line and mobile phone subscribers (per 100 people) 39 82 90

Internet users (per 100 people) 73 241 145

Roads paved ( of total roads) 97

High-technology exports ( of manufactured exports) 1 2 24

Global links

Merchandise trade ( of GDP) 82 84 91

Net barter terms of trade (2000 = 100) 100 109 115

External debt total (DOD current US$) (millions) 1713 2153 1997

Short-term debt outstanding (DOD current US$) (millions) 767 1363 1363

Total debt service ( of exports of goods services and income) 181 72 71

Foreign direct investment net inflows (BoP current US$) (millions) 266 39 107

Workers remittances and compensation of employees received (US$) (millions)

177 215 215

Official development assistance and official aid (current US$) (millions) 20 34 19

Source World Development Indicators database April 2008

81

APPENDIX 2

SUMMARY GENDER PROFILE (Mauritius)

Mauritius

Sub-Saharan Africa

Upper middle income

1980 1990 2000 2004 1980 2004 1980 2004

GNP per capita (US$) 1210 2300 3690 4640 652 601 2391 4769

Population

Total (millions) 10 11 12 12 3850 7258 4394 5762

Female ( of total) 507 501 502 503 503 501 515 514

Life expectancy at birth (years)

Male 63 66 68 69 47 46 63 66

Female 69 73 75 76 50 47 71 73

Adult literacy rate ( of people aged 15+)

Male 848 884 954

Female 750 805 942

LABOR FORCE PARTICIPATION

Total labor force (millions) 0 0 1 1 157 299 193 256

Labor force female ( of total labor force)

37 34 34 35 43 42 42 41

Unemployment

Total ( of total labor force)

33 88 102 12

Female ( of female labor force)

36 96 126 134

EDUCATION ACCESS AND ATTAINMENT

Net primary school enrollment rate

Male 91 96 94 68

Female 92 97 96 60

Progression to grade 5 ( of cohort)

Male 97 99

Female 98 99

Primary completion rates ( of relevant age group)

Male 61 105 98 66 95

Female 63 104 102 56 96

Youth literacy Rate ( of people aged 15-24)

Male 912 937 978

Female 911 954 974

HEALTH

Total fertility rate (births per woman)

27 23 20 20 67 53 31 20

Contraceptive prevalence ( of women aged 15-49)

75 26 76 22 69

95

82

APPENDIX 3

DATA COLLECTION FORM FOR THE SURVEY Sitehelliphelliphelliphelliphellip Participant numberhelliphelliphelliphellip MANAGING DIRECTOR CEO MANAGER

Age group -25 26 ndash 35 36 - 45 46-55 56-64 65+

Education Nursery ndash Standard 4

Std 5 ndash 7 (8) Form 1 ndash 2

Form 3 ndash 4 or A level

College University

Employment Yes No Business (what type)

Partnership Whole Citizen

Joint Venture

Age of Company

1-3 years 4-6 years 7-10 years

11-15 Above 15yrs

Number of Employees

10-25 50-99 100-149 150-200

Place of birth

In the constituency

Outside the constituency

Where

Residence Rural Urban Where

Before starting business

After business

Children

Boys Number

Girls Number

Any born a Yes None

Are they in school

Yes No Some

Working Yes No Some

Annual Sales

Balance Sheet

Less than R1000000

R101 000- 250 000

R251 000- 15 million

R 15 million +

Years Employed as CEO

0-3 4-7 8-14 15-19 Over 20 years

83

APPENDIX 4 Qualitative data questionnaire The following questions were used as a guide during the focus group discussions However they were not followed in the strict order or wording as they appear here

SOCIAL INCLUSION EXCLUSION

I am going to ask you questions regarding support you think the society could give foreign investors There is no right or wrong answers it is just about your opinion

a) How do you feel about foreign investors coming to Mauritius

b) How has your friendship with foreign business before and after they arrive in Mauritius

c) Do you keep in touch with foreign businesses around you and prospective investors

d) In your opinion how does foreign business feel about Mauritius

e) Are foreign businesses doing well or badly

f) What support structures or government incentives are there for foreign investors

g) What kind of support would you like to receive from the government

BUSINESS ATTITUDE AND BELIEFS

I am now going to ask you some general questions about business and your opinions about it

a) How would you describe the general business environment

b) Do you find it difficult to do business with people from different countries of the world Why

c) What do you believe the first thing to do on the morning before opening

your business (Local people) Why

d) How best can the Mauritius people be motivated into business How do you get over them

84

e) What areas do local people consider as niche areas for foreign

business

f) How do local people organize their business Why

g) As a local business person what would you consider as abomination of business in Mauritius Why

h) What is the role of women in the business sector

CULTURE

I am now going to ask you questions about the your culture

a) What are your views about business culture in Port Louis

b) What are the challenges of national culture on business practices in your opinion

c) What are the benefits of culture on business practice

d) Do you think foreign investors need to know the local language when investing in Mauritius

e) If you were to advice a foreign investor what would you want them to know about Mauritius

f) How do you think the family daily practice influences business in

Mauritius

g) What business actions of behaviors are sensitive to the local people

h) How best can foreign investors assimilate with the local business people

i) What do local people like to buy on weekends week days public religious holidays

j) What marketing strategies violet the culture of Mauritius ndashwomen naked Eating behavior Etc

85

APPENDIX 5

Introductory letter consent form

TITLE CULTURE AND INTERNATIONAL BUSINESS

ENTREPRENUERSHIP A CASE STUDY OF MAURITIUS

INTRODUCTION

I am Angelinah Boniface a student pursuing Masters of Science in

Information Systems the University of Sheffield United Kingdom I am

conducting a study on the Impact of culture on small and medium

enterprises for my dissertation The study is expected to last 3 months and a

report of the findings will be availed to all interested stakeholders including the

university as part of course requirements

PURPOSE OF THE STUDY

This study is intended to gain insight into views and opinions about

widowhood and inheritance in relation to health and well being of participants

and the community at large Evidence from this study may be useful in future

government and development agencies‟ planning and provision of relevant

interventions for the benefit of the whole community

VOLUNTARINESS AND CONFIDENTIALITY

Your participation in this study is purely voluntary and you can withdraw

at any time should you feel uncomfortable to proceed Information obtained

from this study will be used for no any other purpose other than the

dissertation It will be kept confidential only accessible to the researcher and

pseudonyms will be used to ensure anonymity and confidentiality of

participants and location The researcher will strive to treat all participants

with dignity respect equality and minimise possible harm that might arise

from the study

Agreeing to take part in this study will be treated as your consent to be

involved in this research BUT YOU HAVE THE RIGHT TO WITHDRAW

THE CONSENT

86

RISKS AND BENEFITS

There are no risks to the questions that will be asked If at any point you feel

uncomfortable to answer any question please feel free to ignore such to avoid

any harm

There is likely to be no immediate benefits to you as a participant However

the information obtained in this study will go a long way in informing the

younger generation and wider audience about the culture It might also be

used by the government and other development agencies to plan for

interventions relevant to the needs of widows in your community in the future

based on the evidence you have provided in this study

CONTACTS

The researcher can be contacted at +44 0791263163 lip07acbshefacuk

or linabonyahoocom in case of any questions issues

In case of any problems that need university attention my supervisor can be

contacted at kalbrightshefacuk

PLEASE DONrsquoT TAKE PART IN THIS STUDY IF YOU ARE BELOW 18

YEARS OF AGE

Thank you very much for your anticipated cooperation

Researcher‟s signature Participant‟s signature

helliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

87

REFERENCES

Bhagat RSet al (2002) Cultural variations in the cross-border transfer of

organizational knowledge an integrative framework Academy of

Management Review 27(2) 204ndash221

Boyacigiller NA amp Adler NJ (1991) ldquoThe parochial dinosaur organizational

science in a global contextrdquo Academy of Management Review 16(2) 262ndash

290

Bowling A (ed) (2002) Research methods in health Investigating health and

health services Buckingham Open University press

Dabee R and Greenway D (2001)The Mauritian Economy A Reader

PalgraveNew York

Dawson C D (2002) Practical research methods A user friendly guide to

mastering research techniques and projects Oxford How to Books Ltd

Denscombe M (ed) (2007) The good research guide for small scale social

research projects Berkshire Open University Press

Denscombe M(ed) (2003) The good research guide For small scale social

research projects Maidenhead Open University Press

Economic And Social Research Council (2005) ESRC research ethics

framework [online]

httpwwwesrcsocietytodayacukESRCInfoCentreopportunitiesresearch5

Fethics5Fframework [ Accessed May 05 2008]

88

Gilbert N (ed) (2001) Researching social life London Sage Publishers

Grbich C (1999) Qualitative research in health An introduction London

Sage publications

Hunter D amp Lang T (1993) The Leeds declaration Leeds Nuffield Institute

for Health

Neuman L W(ed) (2000) Social research methods qualitative and

quantitative approaches Needham Heights MA Allyn amp Bacon

Maynard M amp Purvis J (1994) Researching womens lives from a feminist

perspective London Taylor and Francis group

Muuka GN (2002) Africas informal sector matters a challenge to scholars

to close the knowledge gap Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

Business and Development International Conference Port Elizabeth April 3-

6 pp1-6

Southwood R (2004)The impact of ICT on SMEs ndash a motor for future

economic growth in hard-pressed times [Online] Balancing Act news update

wwwbalancingact-africacomnewscurrent1html [Accessed 26 January

2008]

Machacha L (2002) Impact of information technology on small and medium

enterprises (SMEs) in Botswana Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

89

Business and Development International Conference Port Elizabeth April 3-

6 pp277-82

Organisation for Economic Co-operation and Development (OECD)

(2000)OECD study highlights role of small and medium enterprises in job

creation Organisation for Economic Co-operation and Development

[Online]wwwoecdorgmediapublishpb00-11ahtm [Accessed 8 July 2008]

Commonwealth Secretariat UK (2006) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius London Commonwealth

Secretariat

Reed DM (1998) Using the Business Excellence Model in Small Service

Business British Quality Foundation

Taylor AW amp Adair RG (1994) ldquoEvolution of Quality awards and self

assessment practices in Europe a case for considering organisation sizerdquo

Total quality Management 5 (4) 227-237

United Nations (1993) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

Johanson J amp Wiedersheim-Paul F (1995) The Internationalization of the

Firm - Four Swedish Cases Journal of Management Studies 20 (3) 123-139

90

Chui ACW Lloyd AE and Kwok CCY (2002) The determination of

capital structure is national culture a missing piece to the puzzlerdquo Journal of

International Business Studies 33(1) 99ndash127

Earley PC amp Gibson CB (2002) Multinational Teams A New Perspective

Lawrence Earlbaum and Associates Mahwah NJ

Gibson CB (1999) ldquoDo they do what they believe they can Group-efficacy

beliefs and group performance across tasks and culturesrdquo Academy of

Management Journal 42(2) 138ndash152

Hofstede G (1980) Cultures Consequences International Differences in

Work-Related Values Sage Newbury Park CA

SMIDO (2006)A new Vision For SMEs Development Mauritius

Government Printer Port Louis

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Stone A (1997) SMEs and Technology why should we make special efforts

to help World Bank

Bhagat RS et al (2003) Knowledge in Cross-Cultural Management in Era

of Globalization Where Do we Go from Here in D Tjosvold and K Leung

91

(eds) Cross-Cultural Management Foundations and Future Ashgate Englan

155ndash176

Cairncross F (2001) The Death of Distance Harvard Business School Press

Boston MA

Commonwealth Secretariat UK (2005) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius Commonwealth Secretariat

Drucker PF (1995) Managing in a Time of Great Change Truman Talley

BooksDutton New York

Guilleacuten M (2001) ldquoIs globalization civilizing destructive or feeble A critique

of five key debates in the social science literaturerdquo Annual Review of

Sociology 27 235ndash260

Gibson CB and Cohen SG (2003) Virtual Teams that Work Creating

Conditions for Virtual Team Effectiveness Jossey-Bass San Francisco

Grazol P et al(2004) ldquoThe Effect of Culture on IT Diffusion Email and Fax in

Japan and the US Information Systems Researchrdquo Journal of International

Consumer Marketing 16 4 pp 29-64

Greider W (1997) One World Ready or Not Crown Business New York

92

Gertler MS (1997) The Invention of Regional Culture In Lee R and Willis J

eds Geographies of Economies London Arnold

Govindarajan V and Gupta AK (2001) The Quest for Global Dominance

Transforming Global Presence into Global Competitive Advantage Jossey-

Bass San Francisco

Haire M et al(1966)Managerial Thinking An International Study Wiley

New York

Heuer M et al(1999) Cultural stability or change among managers in

Indonesia Journal of International Business Studies 30(3) 599ndash610

Hofstede G (1997) Cultures and Organizations Software of the Mind New

York McGraw-Hill

Hofstede GH (2001) Cultures Consequences Comparing Values

Behaviors Institutions and Organizations Across Nations London Sage

Publications

Hoecklin L (1995)Embedded Autonomy States and Industrial

Transformation Princeton NJ Princeton University Press

93

IBP USA (2002) Mauritius Investment and Business Guide IB Tauris and Co

LTD London

Kerr C et al (1960) Industrialism and Industrial Man Harvard University

Press Cambridge MA

Kirkman BL amp Shapiro DL (2000) ldquoUnderstanding why team members

won‟t share an examination of factors related to employee receptivity to team-

based rewardsrdquo Small Group Research 31(2) 175ndash209

Lisenda L (2003) Small and medium-scale enterprises in Botswana their

characteristics sources of finance and problems BIDPA Gaborone

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Meredith GG (ed) (2004) Small Business Management in Australia

McGraw-Hill Sydney

Mistry PS (1999) ldquoCommentary Mauritius ndash quo vadisrdquo African Affairs 98

(393) 551ndash69

Mullins LJ(ed) (1999) Management and Organizational Behavior 5th ed

London Financial Times Pitman

94

Myers MDamp Tan FB (2002) ldquoBeyond Models of National Culture in

Information Systems Researchrdquo Journal of Global Information Management

10 (1) 112-134

Putz R (2000) ldquoCulture and entrepreneurship views from the middle and

lower level managersrdquo Journal of Business Ethics 22 145- 153

Scottish Economic Statistics Scottish ExecutiveONS IDBR (2005)Size

Analysis of Welsh Business SDR 692004Statistical Press Release URN

0440

Straub D et al (2002) rdquoTowards A Theory-Based Measurement of Culture

Journal of Global Information managementrdquo 10 (1)

Schaeffer RK (2003) Understanding Globalization The Social

Consequences of Political Economic and Environmental Change Rowman amp

Littlefield Lanham MD

SMIDOA new Vision For SMEs Development(May 1996)

SMME Task Force Report (1998) Small medium and micro-enterprises task

fore force report Government Printer Ministry of Commerce and Industry

Sondergaard M amp Hofstede G (1994) ldquoA study of Reviews Citations and

Replicationsrdquo Organization Studies 15 (3) 447-456

95

Schein EH (1992) Organizational Culture and Leadership Jossey-Bass

San Francisco

Stone A ( 1997) SMEs and Technology why should we make special efforts

to help (World Bank 1997)

Statistical Press Release (2005) URN 0592 Office for National Statistics

Weisinger JYamp Trauth EM (2002) ldquoSituating Culture in the Global

Information Sectorrdquo Information Technology amp People 15 (4) 306-320

United Nations (2005) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

v

This report is dedicated to all those who spend their daily lives trying to cope

with the challenges of HIVAIDS and all those who are affected by this

disease and to the new AIDS free generation

ACKNOWLEDGEMENTS

My sincere gratitude to all whose knowledge skills experience and support

went into this work First are the authors of various literatures whose work

guided this dissertation Overly important too are all those participants who

offered their resources and business experiences which has influenced the

outcome of this paper

To the University of Sheffield thanks for the opportunity to pursue this course

at your institution and the experts you provided to teach various aspects of the

course A lot of thanks to the course leader and my supervisor Dr Kendra

Albright for all the guidance and motivation she provided during the entire

programme Moreover for the opportunity she gave me to pursue this

research Thanks too to the rest of the tutors especially Dr Barry Eaglestone

who refined my research knowledge and skills Special thanks go to my

sponsor The Commonwealth Scholarship for providing funds for me to purse

my programme To my Administrator Dr Fiona Groccut and Sarah Ferdecio

thank you for the fast response you would give whenever I needed your help

A special thank you to Richard Campos the Managing Director for

RCBusiness Support Ltd for the support you throughout this project

I could not do without the invaluable family support from my sister Juliet

Shadreck and my mom Monica Boniface thank you mum Particular thanks

to Theo my daughter who I left at a tender age to come and pursue this

vi

course To Gobonaone Keaosenya thanks for your moral and emotional

support you gave during my studies To my family Lebo Kay Goitse Kgosi

Monica Jullie Douglas and all other friends not mentioned thanks for your

moral support Thanks to my family for their prayers and support

Thanks too to all my MSc in Information Systems classmates for sharing their

extensive and diverse knowledge skills and experiences during the course I

acknowledge friends and colleagues in Botswana who encouraged me to

pursue this programme particularly Dr Jorosi for the inspirational advice

Special thank to my sincere friend Patience Chakandinakira for her moral

supportTo Dr Phil Lyoka thank you for the editing and grammar corrections

and all the support you gave throughout this project

Due to technical limitations I am not able to list everyone but I OWE ALL OF

YOU who provided moral academic technical economic support or

otherwise a very BIG THANK YOU including whoever reads this work

vii

LIST OF ABBREVIATIONS

BIDPA Botswana Institute for Development Policy and Analysis BOI Board of Investment ESRC Economic And Social Research Council EPZ Export Processing Zones FDI Foreign Direct Investment GDP Gross Domestic Product GSP General System of Preferences IB International Business ICT Information Communication Technologies ILO International Labour Organisation IT Information Technology ISO International Organization for Standardization IVTB Industrial and Vocational Training Board MEDIA Mauritius Enterprise Development Investment Authority MNC Multinational Companies NAFTA North American Free Trade Agreement NHPA National Handicraft Promotion Agency OECD Organisation for Economic Co-operation and Development SADC Southern African Development Community SEHDA Small Enterprises amp Handicraft Development Authority SME Small and Medium Enterprise SMME Small medium and micro-enterprises SMIDO Small amp Medium industries Development Organisation UK United Kingdom UN United Nations USA United States of America WTO World Trade Organization

viii

LIST OF ILLUSTRATIONS TABLES Table 1 THE STUDY TIME SCALE

2 RESPONDENTS RATE ACCORDING TO SECTORS

3 AGE GROUP AS PER PARTICPANT

4 GENDER PROFILE

5 EDUCATION PROFILE 6 YEARS EMPLOYED AS CEO 7 COMPANY AGE PROFILE 8 NUMBER OF EMPLOYEES 9 ANNUAL SALES 10 OWNERSHIP

FIGURES 1 MAP OF MAURITIUS SHOWING ALL PROVINCES

2 MAURITIUS MAP SHOWING POLITCAL DIVISIONS

3 THE DYNAMIC OF TOP-DOWN-BOTTOM-UP PROCESS ACROSS LEVELS OF CULTURE

4 PUTZ MODEL FOR IMMIGRANT BUSINESS AND CULTURE

5 THE BASIC MECHANISM OF INTERNATIONALISATION-STATE AND CHANGE ASPECT

ix

ABSTRACT

In this new millennium few executives can afford to turn a blind eye to global

business opportunities The globalizing wind has broadened the mindsets of

executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories One such new

trajectory is the concern with national culture Whereas traditional IB research

has been concerned with economic legal issues and organizational forms and

structures the importance of national culture has become increasingly

important in the last two decades largely as a result of the classic work of

Hofstede (1980) National culture has been shown to impact on major

business activities from capital structure (Chui et al 2002) to group

performance (Gibson 1999)

The purpose of this study was to understand the concept on how to penetrate

a new international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

Data was collected through telephone interview web survey literature review

and face to face interview involving business managers legal stakeholders

and government officials and former government ministers About 17

telephone interviews were done with only government officials 4 face to face

interviews and 140 web survey interviews questions All the respondents were

x

randomly selected and respondents would suggest further participants Data

was put in to categories and themes and analysed according to those themes

Putz (2000) model was used as guide to selection of themes

Findings revealed the following 1 Language and religion are not a barrier to

foreign investment in Mauritius 2 Mauritius is a peaceful and tolerant nation

and most of its social life revolves around family and friends 3 Market

opportunities exits in the manufacturing industry offshore financial services

cyber culture and the construction industry 4 The country‟s business

economy faces stiff competition from Botswana South Africa and Vietnam 5

The government plays an important role in ensuring security for foreign

investors

From the results it was concluded that culture plays an important role in the

daily lives of the Mauritian people but it does not have a direct impact to

investment in Mauritius

1

CHAPTER ONE

INTRODUCTION

Globally Small and Medium Enterprises (SMEs) are increasingly regarded as

vital for diversifying economies through the creation of employment

(Machacha 2002 p 277) The OECD (2000) notes that small and medium-

sized enterprises account for 60-70 percent of jobs created in member

countries Southwood (2004) in discussing the status of the SME sector in

Africa observed that governments and large corporations dominated

economies of the countries yet the real engine of economic growth lay with

SMEs Muuka (2002 p 1) in discussing the SME sector in Africa noted that

the informal sector is huge due to the large numbers of employees it absorbed

as a consequence of inadequate jobs and opportunities in the formal sector

The author points out that in many African countries the informal sector is

estimated to employ from three to six times the number of employees in the

formal sector However very little has been documented through research

about this important sector

In Mauritius the Mauritian government believes that the real engine of

sustainable and equitable growth is in the SME sectors Not only is it of great

importance for the rate of job creation and income generation but also it

deserves particular attention since the sector has been largely neglected in

the past In this respect this study of Mauritius is important in addressing

some of issues of culture by using the International business as a framework

for this study to understand the business environment in Mauritius and the

potential for growth in a global perspective (Stone 1997)

2

In this new millennium few executives can afford to turn a blind eye to global

business opportunities Japanese auto-executives monitor carefully what their

European and Korean competitors are up to in getting a bigger slice of the

Chinese auto-market Executives of Hollywood movie studios need to weigh

the appeal of an expensive movie in Europe and Asia as much as in the US

before a firm commitment The globalizing wind has broadened the mindsets

of executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories

However research shows that as markets competition and organisations

globalise the business people businesses themselves and consumers

involved in these institutions increasingly have to interact manage negotiate

and compromise with people from different cultures (Hofstede 1997

Hoecklin 1995) Global business managers report that when doing business

overseas challenges mount For example structural conditions physical

social and economic arrangements can affect business operations and

outcomes as can the varied norms and behaviours that come with different

national cultures

One such new trajectory is the concern with national culture Whereas

traditional IB research has been concerned with economiclegal issues and

organizational forms and structures the importance of national culture

broadly defined as values beliefs norms and behavioral patterns of a

national group (Hofstede1980) has become increasingly important in the last

two decades largely as a result of the classic work of Hofstede (1980)

3

National culture has been shown to impact on major business activities from

capital structure (Chui et al 2002) to group performance (Gibson 1999) For

reviews see Boyacigiller and Adler (1991) and Earley and Gibson (2002)

Weisinger and Trauth (2003) report that culture evolves and takes unique

forms in local offices of organizations This means that culture is both dynamic

and situated in its local context Thus external conditions both structural and

cultural can influence global business Yet small and medium enterprise

(SMEs) managers can have an impact on how their organizations‟ cultures

evolve Therefore strategic leaders need to introduce unique norms values

and processes that fit together coherently in successful organizations

Therefore the main purpose of this case study is to explore and understand

the Small Medium Enterprise (SMEs) business environment in Mauritius and

how SMEs can penetrate the business culture there

The purpose of this paper is therefore to explore and understand how national

culture influences international business decisions and how to culture affects

international business investment using Mauritius as a case study

In this chapter the author outlines the background of the study specifies the

study objectives describes the significance of the study gives methodological

overview and finishes off by outlining definitions of key terminologies

4

11 Background to the Study

Strategically located in the Indian Ocean at the crossroads of Africa and Asia

Mauritius is reputed for its beautiful countryside and its 150 kilometres of white

sandy beaches and transparent lagoon A British colony that gained

independence in 1968 officially known as Republic of Mauritius the country is

positioned to the east of the Madagascar Islands The geographical

coordinates of the nation are 20ordm17 South latitude and 57ordm33 East longitude

The total area covered by the island nation is 2040 square kilometres

Mauritius enjoys a maritime sub-tropical climate and is therefore an all-year-

round holiday destination From a monocrop economy depending mainly on

sugar it has diversified its economic activities into textile and apparel

industry tourism and financial service Mauritius has witnessed a massive

development in the last decades (SMIDO 2006)

5

Figure 1 Map of Mauritius showing all Provinces

Source Encarta World atlas online

6

Figure 2 Mauritius map showing political divisions of the country

Source Maps of the world online

The research area was around the capital city Port Louis marked in red For

anonymity the site was just called A or B Administratively Mauritius is divided

into nine Provinces (figure 2)

The country is remarkable in its ethnic diversity It forms a unique mosaic of

immigrants from the Indian sub-continent Africa Europe and China The

cultural diversity and harmony of the island make Mauritius a unique place in

the world The various religions found on Mauritius tend to play a major part in

7

the islands cultural events and churches temples and mosques are to be

found everywhere Hindus make up approximately half of religiously affiliated

Mauritians followed by Muslims and Christianity as the minority It is also

known for its social peace political stability and racial harmony Its steady

economic growth over the years coupled with its nation‟s social cohesion and

prosperity ensure continuing development (Country Profile 2005)

The country is equipped with a highly skilled labour force to suit virtually all

business in two international languages English and French and a very good

infrastructure thereby attracting Foreign Direct Investment The average

economic growth was 56 over the last 3 years The income per Capita has

reached 4000 US Dollars As a result the standard of living has gone up The

country has now a life expectancy rate of 714yrs an adult literacy rate of 83

(Country Profile 2005)

To face globalisation and a new economic environment the Government has

taken several steps High value-added capital intensive and knowledge-

based activities are on the priority list The Information Technology sector is

undergoing rapid changes so as to be fit for the next millennium The aim is to

make Mauritius a centre for high-tech and software services which can be

exported (Commonwealth Secretariat 2006)

8

12 An Overview of Mauritian Economy

The economy of Mauritius has experienced major structural transformation

over the last two decades The country has moved away from a mono-crop

economy with fast population growth high unemployment and low per capita

income to one that is more dynamic and diversified The sources of

diversification have been agriculture export manufacturing (mainly textile)

tourism and more recently international services with Offshore and Freeport

activities (Country profile 2005)

To respond to the global competition in these sectors Mauritius has made

extensive use of modern technology to improve its productivity and efficiency

The real growth rates have been around 54 over the past four years and

Mauritius is now classified as a middle-income country and is one of the

healthiest economies in the whole African region (Country profile 2005) The

sugar sector provided the start-up capital for the Export Processing Zones

(EPZ) The rapid rate of growth of investment in the manufacturing sector

(investment grew by over 30 each year from 1983 until the late 1990s in this

sector) that led to the success of the EPZ and the Mauritian economy as a

whole This was made possible by the confidence of entrepreneurs and

foreign investors prevailing in the country at that particular time The private

sector accounts for approximately 70 of total capital formation in Mauritius

Investment rate stood around 27 in the four years ending 1996 peaking to

30 in 1994 (SMIDO 1996)

9

When the government recommended the diversification of the economy with

the creation of Export Processing Zones in the early 1980‟s the EPZ sector

benefits from duty-free and quota free access into European Union markets

granted under the Lomeacute Convention as well as tariff preferences granted

under the General System of Preferences (GSP) by countries such as North

America and Japan The mid 1980s witnessed a textile boom raising per

capita incomes and living standards However the conclusion of the Uruguay

Round (General Agreement on Trade amp Tariffs) implies the loss of guaranteed

markets and preferential access which will result in strong competition in

these respective markets (Country profile 2005)

The new strategy of the industrial sector aims at targeting high quality and

high value added products with a view to restoring the competitiveness of the

goods by applying latest technology to the manufacturing industry and hence

improving the quality of the finished products Limited data is available

regarding the SME sector in Mauritius The current research has observed

that there is little research in the field in SME sector in Mauritius

In view of the importance of foreign investment as a source of sustenance to

economic growth the government of Mauritius has taken a series of policy

measures to encourage its flows into manufacturing offshore banking and

financial services information technology communication and tourism As far

as foreign investors are concerned Mauritius offers itself as an attractive

destination because several positive features such as political stability

10

availability of skilled labour and investment-friendly rules and institutions

(Stone 1997)

With such a promising economy there is virtually no evidence on how to

penetrate the business culture in Mauritius and how culture can affect SMEs

and business opportunities therefore this study will explore and understand

the business environment in Mauritius and the challenges of doing business

there as a foreign investor Currently there is very little research done on

SMEs and culture in Mauritius

13 Mauritius SME Background

Experience shows that attitudes towards small business vary from decade to

the next from country to country Before the industrial revolution all business

was small business but with industrial and commercial expansion of

developed nations small has become medium and medium has become big

business

Business owners and managers have often seen growth as an end in itself

and at time the cry get big or get out has been heard in most nations

(Meredith 2004) For more than two decades SMEs have experienced

favourable growth SME has long been prominent in the countrys economy

and make up a large portion of national economy in terms of output

employment and effective utilisation of regional resources Small and medium

enterprises in Europe make up 998 of all European enterprises provide

66 of its jobs and account for 65 of its business turnover (Meredith 2004)

11

In developing countries SMEs account more than 90 of all enterprises

Over the last five years they have been responsible for more than 80 of job

created (Stone 1997) On the issue of job creation Stone (1997) found that

SMEs create more employment than large enterprises and with a lower

investment per job created SMEs are not usually associated with international

activity but they do in fact play a significant international role and their

importance appears to be increasing Available data on SMEs international

activity are very limited (Stone 1997)

In general terms and depending on the country SMEs contribute between

15 and 50 of exports and between 20 and 80 of SMEs are active

exporters Overall it is estimated that SMEs now contribute between 25 and

35 of world-manufactured exports (UN 2005) Increased exports not only

boost the level of sales and employment but also extend the life cycle of

goods and services

In Mauritius SMEs represent 19 according to a report issued by the

Commonwealth Secretariat entitled a Study of Small Firm export Policies

and Institutions in Mauritius Subsequently these SMEs have developed

gradually and move from their tradition orientated operations to export-led

firms probably due to improvement of technology in the field of communication

and the new economic dimension which prevailed

At this juncture it is important to report that few studies on culture and small

and medium entrepreneurship have been conducted on Sub-Saharan Africa

12

There is a paucity of information and even those scarce studies they do not

cover broad perspectives of the situation of SMEs in Sub-Saharan Africa

Therefore this study builds upon the existing limited body of research

regarding how business cultures contribute to the success or failure of small

and medium entrepreneurs In particular it explores the business culture in

Mauritius and its barriers to penetration for new and foreign small and

medium entrepreneurs

14 Purpose Statement

The purpose of this study was to understand the concept on how to penetrate

an international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

15 Aims and Objectives

To investigate the challenges of national cultural differences in

business in Mauritius

To investigate how to penetrate the business environment for a new

and or foreign business culture especially in Mauritius

To investigate business opportunities for SMEs in Mauritius and how

these can benefit the locals

13

16 Research Question

How can Small and Medium Enterprises penetrate the business culture in

Mauritius

These sub-questions all pertain to SMEs business

o 161 SUB-QUESTIONS

What kind of businesses are operating in Mauritius now

What are their business strategies (marketing brands) etc

What are the necessary mechanisms for establishing business in

Mauritius

What are the business needs of established and starting businesses

What are the mechanisms for potential growth of local business

What are the challenges for doing business in Mauritius

How much of business behaviour is influenced by the national culture

17 The Significance of the Study

The findings of the current study will increase the understanding of cultural

barriers to market penetration for SMEs in Mauritius The study adds

knowledge to the body of literature in this area focusing at further

improvement of understudying of culture and business issues The

study becomes part of the universitys education development in line with its

obligations to the communities and the country This research problem arose

from an information need of a particular client This research therefore will try

to explore the client‟s information need and probably contribute to the wealth

of knowledge

14

18 Definitions

CULTURE Hofstede (1997) defines culture as ldquothe collective programming of

the mind which distinguishes the members of one group or category of people

from anotherrdquo It is the norms beliefs and values common to a society

Culture is about the way people understand their world and make sense of it

It only when this is taken for granted assumptions are challenged that people

realise that they even exist (Hofstede 1997)

ENTERPRISE An enterprise is considered to be any entity engaged in an

economic activity irrespective of its legal form This includes in particular

self-employed persons and family businesses engaged in craft or other

activities and partnerships or associations regularly engaged in an economic

activity (European Commission 2003)

INTERNATIONAL BUSINESS International business consists of transactions

that are devised and carried out across national borders to satisfy the

objectives of individuals and organizations The Primary Types of International

Business Activities Are Importing and Exporting Direct Foreign Investment

(Govindarajan and Gupta 2001)

GLOBALISATION refers to a bdquogrowing economic interdependence among

countries as reflected in the increased cross-boarder flow of three types of

entities goods and services capital and knowhow‟ (Govindarajan and Gupta

2001 4)

15

SMALL AND MEDIUM INTERPRISES (SME) is made up of enterprises

which employ fewer than 250 persons and which have an annual turnover not

exceeding EUR 50 million andor an annual balance sheet total not

exceeding EUR 43 million (European Commission 2003)

In Mauritius an SME has been redefined taking into account the volume of

investment in equipment which was previously one million up to 10 millions

Mauritian Rupees presently to be classified as a small enterprises and with

less than 50 and 200 employees for small and medium scale respectively

(Stone 1997)

16

CHAPTER TWO

LITERATURE REVIEW

The aim of this chapter is to introduce conceptual themes that are important in

order to understand the role of culture in international business The chapter

discusses the context of relationship between culture and international

business practices in small and medium enterprises (SMEs) and the major

challenges they face in the area of globalisation A model adopted from Putz

(2000) forms a framework for articulating the conceptual role that culture has

in international business using Mauritius as a case study

21 Embracing Cultural change in an era of globalization

A significant theoretical issue for international business is the role of culture in

the whole aspect of information transformation Since the landmark study by

Haire et al (1966) and the publication of Industrialism and Industrial Man by

Kerr et al (1960) researchers have continued to search for similarities in

culturally specific beliefs and attitudes in various aspects of work related

attitudes as well as consumption patterns and other behaviours If cultures of

the various communities of the world are indeed converging (Heuer et al

1999) International Business (IB) related practices would likely become

increasingly similar For example standard culture-free business practices

would emerge and inefficiencies and complexities associated with divergent

beliefs and practices in the past era may disappear (Heuer et al 1999)

17

Studies elsewhere suggest that culture gets affected by globalization practices

in the current 21st century Globalization has seen flows of information

technology money and people and is conducted via international

government organizations such as the African Union the North American

Free Trade Agreement (NAFTA) and the European Community global

organizations such as the International Organization for Standardization

(ISO) multinational companies (MNCs) Also includes cross-boarder alliances

in the form of joint ventures international mergers and acquisitions These

interrelationships have enhanced participation in the world economy and

have become a key to domestic economic growth and prosperity (Drucker

1995 153)

Literature suggests that because globalization tends to redistribute economic

rewards in a non-uniform pattern a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) Strong opposition to

globalization usually originates from developing countries that have been

affected by the destabilizing effects of globalisation However in recent years

there have been heated debates in Western economies triggered by

significant loss of professional jobs as a result of offshoring to low wage

countries (Schaeffer 2003)

Workers in manufacturing and farming in advanced economies are becoming

increasingly wary of globalization as their income continues to decline

18

significantly In parallel to the angry protests against globalization the flow of

goods services and investments across national boarders has continued to

fall after the rapid gains of the 1990s The creation of regional trade blocs

such as NAFTA the European Union and the Association of Southeast Asian

Nations have stimulated discussions about creating other trade zones

involving countries in South Asia Africa and other parts of the world

Although it is often assumed that countries belonging to the World Trade

Organization (WTO) have embraced globalization the fact is that the world is

only partially globalized at best (Schaeffer 2003)

Many parts of Central Asia and Eastern Europe including the former

republics of the Soviet Union parts of Latin America Africa and parts of

South Asia have raised heightened scepticism about globalization (Greider

1997) In fact less than 10 of the world‟s population are fully globalized (ie

being active participants in the consumption of global products and services)

(Schaeffer 2003)

According to Guile`n (2001) these trends might indicate that globalization is

being impeded by tendencies towards country-specific modes of economic

development making the convergence of IB-related values and practices

difficult to achieve Hofstede (1980)‟s favourite definition of f ldquoculturerdquo is

precisely that its essence is ldquocollective mental programmingrdquo it is that part of

peoples conditioning that they share with other members of their nation

region or group but not with members of other nations regions or groups

Hofstede (2001) asserts that these mental programs of people around the

19

world do not change rapidly but remain rather consistent over time His

findings tend to suggest that cultural shifts are relative as opposed to

absolute Although clusters of some countries in given geographical locales

(eg Argentina Brazil Chile) might indicate significant culture shifts towards

embracing Anglo values the changes do not diminish the absolute differences

between such countries and those of the Anglo countries (ie US Canada

UK)

According to Hofstede (1980) Examples of differences in mental

programming between members of different nations can be observed all

around us One source of difference is of course language and all that

comes with it but there is much more In Europe British people will form a

neat queue whenever they have to wait not so the French Dutch people will

as a rule greet strangers when they enter a small closed space like a railway

compartment doctor‟s waiting room or lift not so the Belgians Austrians will

wait at a red pedestrian traffic light even when there is no traffic not so with

the Dutch Swiss tend to become very angry when somebody-say a foreigner

makes a mistake in traffic not so with the Swedes All these are part of an

invisible set of mental programs which belongs to these countries‟ national

cultures Such cultural programs are difficult to change unless detaches the

individual from his or her culture Within a nation or a part of it culture

changes only slowly (Hofstede 1980)

20

This is the more so because what is in the minds of the people has also

become crystallized in the institutions namely government legal systems

educational systems industrial relations systems family structures religious

organizations sports clubs settlement patterns literature architecture and

even in scientific theories All these reflect traditions and common ways of

thinking which are rooted in the common culture but may be different for other

cultures (Hofstede 1980)

22 The dynamics of Culture as a Multi-level Multi- layer construct

Multi-level approaches of viewing culture as a multi-level construct that

consists of various levels nested within each other from the most macro level

of a global culture through national cultures organisational cultures group

cultures and cultural values represented the self aspect of the individual See

figure 3

21

Figure 3 The dynamic of top-down-bottom up process across levels of

culture (Source Schein 1992)

The model proposes that culture as multi-layer construct exist at all levels

from global to the individual Changes that take place at the external layer of

behaviour are most likely shared by individuals who belong to the same

cultural background level hence characterising the aggregated unit (Schein

1992)

Top-

Down

Individual

Behaviour

Values

Assumptions

Global Culture

National Culture

Organizational Culture

Group Culture

Bottom

Up

22

Below the global level are nested organizational layers or networks at the

national level with their local cultures varying from one nation or network to

another Further down are local organizations and although all of them share

some common values of their national culture they vary in their local

organizational cultures which are also shaped by the type of industry that

they represent the type of ownership the values of the founders etc Within

each organization are sub-units and groups that share common national and

organizational cultures but differ from each other in their unit culture based on

differences in functions of their leaders‟ values and the professional and

educational level of their members At the bottom of this structure are

individuals who through the process of socialization acquire the cultural values

transmitted to them from higher levels of culture Individuals who belong to the

same group share the same values that differentiate them from other groups

and create a group-level culture through a bottom-up process of aggregation

of shared values (Schein 1992)

Both top-down and bottom-up processes reflect the dynamic nature of culture

and explain how culture at different levels is being shaped and reshaped by

changes that occur at other levels either above it through top-down

processes or below it through bottom-up processes(Schein 1992) Similarly

changes at each level affect lower levels through a top-down process and

upper levels through a bottom-up process of aggregation The changes in

national cultures observed by Inglehart and Baker (2000) could serve as an

23

example for top-down effects of economic growth enhanced by globalization

on a cultural shift from traditional values to modernization

In view of the complexity of the organizational structures specific

organizational structures that have global character need to be established so

as to adopt common rules and procedures in order to have a common

bdquolanguage‟ for communicating across cultural borders (Kostova 1999 Kostova

and Roth 2003 Gupta and Govindarajan 2000)

Given the dominance of Western Multi National Companies (MNCs) the

values that dominate the global context are often based on a free market

economy democracy acceptance and tolerance of diversity respect of

freedom of choice individual rights and openness to change (Gupta and

Govindarajan 2000) The multi-level structure explains how a lower-level

culture is being transformed by top-down effects and that the cultural layer

that changes first is the most external layer of behaviour In the long run

bottom-up processes of shared behaviours and norms would affect the local

organizational culture as well (Schein 1992)

23 International Business and Culture

Knowledge of cultural differences is one of the key components in

international business practices and success Improving levels of cultural

awareness can help companies build international competencies and enable

individuals to become more globally sensitive (Hofstede 2003) Indeed

cultural differences contribute towards different ways people behave in

24

business Research in the field of international management underscores that

the attributes of cultural knowledge used by a firm play an important role in the

firms expansion For example Martin and Salomon (2003) found that cultural

orientation in entrepreneurial action is a central theme and can serve as a

starting point for immigrant business

ldquoUnderstanding the culture and the conceptualisation of culture in conjunction with entrepreneurial action is a critical issue when doing business in an international environment Contributions of economic geography inspired by the cultural turn which shows alternative ways of thinking about the connection between culture and economy by using a new understanding of culture are also critical (pg 198)rdquo

The statement underscores the important of understanding the culture of a

society before attempting to do business there otherwise the company runs a

risk of going out of business The ways in which different groups of people

interpret their environment and organise their activities is based the on the

specific cultural values and assumptions Certain values often thought to be

universal really do differ from culture to culture What constitutes an ethical

business practice is not the same everywhere This can be an enormously

difficult area in managing business across cultures (Straub et al 2002)

Although one may claim cultural differences to be going away they are

actually being absorbed in the business practices This makes it more critical

than ever to try to understand different cultures and their influence on the

ways people do business and view the world The costs of not understanding

are getting greater than ever The essence of culture is not what is visible on

the surface It is the shared views about what people understand and interpret

25

the world These cultural differences are crucial influences on interactions

between people working and managing across culture (Gertler 1997)

The social behaviour of a society is embedded in a particular context and is

connected to other deeply held values and beliefs (Weisinger and Trauth

2003) This means that the stakes are high for mismanaging cultural

differences Ignoring or mishandling differences can result in an inability to

retain and motivate employees a misreading of the potential of cross-border

alliances marketing and advertising blunders and failure to build sustainable

sources for competitive advantage Mismanaging cultural differences can

render otherwise successful managers and organisations ineffective and

frustrated when working across cultures (Weisinger and Trauth 2003)

24 Putz Model For Immigrant Business and Culture

Literature in the field of Immigrant Business differentiates mainly between two

basic approaches each with a different emphasis which are combined to

explain entrepreneurial action of immigrants (Putz 2000) The first approach

emphasis the bdquoopportunities‟ offered by the host country including access to

the market and job market conditions The second approach focuses on the

bdquoresources‟ of migrant groups from whom the concept of culture becomes

essential (see Figure 1 below)The Putz (2000) cultural model below is a

summary of explanatory approaches following the assumption that self

employment of certain groups is the result of their specific cultural

predisposition which favours business activity

According to Putz‟s (2000) view of cultural model the bdquoopportunities‟

approach which refers to market possibilities as an explanation for self

26

employment of immigrants assume that there are certain market segments

with favourable development perspectives especially for immigrant groups

Here two factors receive special attention which are niche markets and legal

and institutional frameworks Niche markets make the establishing of business

by immigrants easier because their needs for consumer goods create specific

demand Legal and institutional frameworks gain awareness in international

comparative studies through restrictions specified by a country regarding

business permits and regulations these frameworks influence both the extend

and the sectored structure of the bdquoimmigrant business‟ (Putz 2000)

According to Putz (2000) the observation that most immigrant groups show a

higher level of self employment rate than others often forms the background

explanation which focus on opportunities created by the host society

Resource models stress the shared characteristics of migrants of same origin

Resources models explain that certain groups have specific cultural

resources which make it easier for members of that group to become self

employed therefore one can distinguish between the cultural traditions and

socialethnic networks ( Putz 2000)

27

Figure 4 Dominating models concept of bdquoImmigrant Business‟ (Source Putz

2000)

OPPORTUNITIES

Market Access

Possibilities

Market Conditions

Niche Markets

lsquoOpenrsquo Markets

Job Market

Conditions

Access

Vertical Mobility

Legal and Institutional

Frameworks

lsquoEthnicrsquo

Business

RESOURCES

lsquoClass Resourcesrsquo lsquoCultural Resourcesrsquo

Cultural

Traditions

Social lsquoEthnicrsquo

Resources

28

When successfully managed differences in culture can lead to innovative

business practices faster and better learning within the organisation and

sustainable sources of competitive advantage (Sondergaard and Hofstede‟s

1994) In relation to that the current study argues that managers need to

study and understand the culture and the niche market before investing This

assumption has been raised as a result of the previously reported experiences

and research findings already reported so far It is therefore critically important

to understand that every society has got its own way of behaving which needs

to be understood if the business is to succeed Operating companies need to

understand what their business means to the people of the given community

and their culture

Several studies of international business have indicated that

internationalization of the firms is a process in which the firms gradually

increase their international involvement(Johanson amp Wiedersheiml 1995

Gibson 1999 Chui et al 2002 ) It seems reasonable to assume that

within the frame of economic and business factors the characteristics of this

process influence the pattern and pace of internationalization of firms Figure

5 below shows a model of the internationalization process of the firm that

focuses on the development of the individual firm and particularly on its

gradual acquisition integration and use of knowledge about foreign markets

and operations and on its successively increasing commitment to foreign

markets The basic assumptions of the model are that lack of such knowledge

is an important obstacle to the development of international operations and

that the necessary knowledge can be acquired mainly through operations

abroad (Johanson and Wiedersheiml1995)

29

FIGURE 5 The Basic Mechanism of Internalisation- State and Change Aspects

Figure 5 Basic Mechanism of Internalisation (Source Johanson amp

Wiedersheiml 1995)

Market knowledge and market commitment are assumed to affect both

commitment decisions and the way current activities are performed These in

turn change knowledge and commitment ( Aharoni 1966) In the model it is

assumed that the firm strives to increase its long-term profit which is

assumed to be equivalent to growth (Williamson 1966) The firm is also

striving to keep risk-taking at a low level These strivings are assumed to

characterize decision-making on all levels of the firm Given these premises

and the state of the economic and business factors which constitute the frame

in which a decision is taken the model assumes that the state of

internationalization affects perceived opportunities and risks which in turn

influence commitment decisions and current activities (Johanson amp

Wiedersheiml 1995)

Market

Knowledge

Market

Commitment

Commitment

Decisions

Current

Activities

30

2 5 The Role Of Information Communication Technologies

Hofstede (2001) observed that not only will cultural diversity among countries

persist but also new technologies might even intensify the cultural differences

between and within countries Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

Information communication technologies (ICTs) enable users to access varied

amounts of information globally however it does not necessarily increase

their capacity to absorb the information at the same rate as the information is

disseminated or diffused (Bhagat et al 2002) In addition information and

knowledge are interpreted through cultural lenses and the transfer or diffusion

of organizational knowledge is not easy to accomplish across cultural

boundaries (Bhagat et al 2002)

Ethnic groups around the world observe the lifestyles and cultural values of

other countries and some are interested in adopting part of the lifestyle and

values but others reject it completely (Kirkman and Shapiro 2000) The

effects of new technologies on improving efficiencies of multinational and

global corporations are well known but it is not known how these new

technologies especially computer-mediated communication and the Internet

31

might create significant shifts in the cultural patterns of different ethnic groups

(Kirkman and Shapiro 2000) or on their ways of doing business

In essence there in need to explore how the spread of ICTs is affecting the

progress of globalization in different parts of the world by incorporating the

role of cultural syndromes organizational cultures and other processes

which has recently been attempted by scholars such as Bhagat et al (2003)

and Gibson and Cohen (2003)

Information and Communications Technology (ICT) has become a catchword

with different interpretations and viewpoints even among experts As the

name suggests ICT encompasses all the technology that facilitates the

processing transfer and exchange of information and communication

services In principle ICTs have always been available since the advent of the

printing press The only difference is that from the late twentieth century rapid

advances in technology changed the traditional ways in which information was

processed communications conducted and services available (Adu 2002)

These technological advances have changed business operations and the

way people communicate They have introduced new efficiencies in old

services as well as numerous new ones One could even imagine going as far

as replacing the term Post-industrial Society with ldquoInformation Society that

is a society where the ability to access search use create and exchange

information is the key for individual and collective well-being (Kaplan 2001)

32

Globally entrepreneurship is considered as the engine of economic

development The SME sector has the potential to address socio-economic

challenges facing both developing and developed countries Without small

business development it is argued that economies stagnate unemployment

levels continue to rise and the general standard of living deteriorates

Information and communications technology (ICT) has been identified as a

major area of need to develop the SME sector in areas of information

provision access to national and international markets and other areas of

business development and support ( Ferrand and Havers 1999)

ICTs enable entrepreneurs to manage their businesses efficiently and thus

enhancing their competitiveness in the global market They can increase their

geographic reach improve efficiency in procurement and production and

improve customer communications and management For these reasons the

need to encourage and accelerate the uptake and optimal application of ICTs

by SMEs in different sectors of the economy cannot be overemphasized

(Ramsay et al 2003) The ICT sector has the potential to absorb prospective

entrepreneurs considering various business opportunities offered by the

sector Some of the business opportunities available within the sector relate to

systems integration application development database administration web

design and internet service provision The sector is also seen as an area with

major opportunities for the historically disadvantaged sectors of the

population It therefore becomes imperative for government to provide

mechanisms to accelerate the entry of SMMEs into the ICT sector (ILO 2001)

33

26 Cross Culture and International Business

Cross-cultural management advice rests on several assumptions in the

tradition of Hofstede (1997) that a) that national culture is comprised of norms

and values that can be readily identified and addressed b) that these norms

values and patterns of behaviour are stable and change at an extremely slow

pace and c) that national culture predominates over organizational culture

epistemic culture gender or other determinants of attitudes and behaviour

According to Hosftede (1997) national culture is comprised of norms and

values that can be readily identified and addressed

Organisational culture (common values and attitudes) affects organizational

success and innovation develops over time and may be difficult to change

ldquoThere is a relationship between an organization‟s culture and its

performance The pervasive nature of organizational culture means that if

change is to be brought about successfully this is likely to involve changes to

culturerdquo (Mullins 1999)

An alternative view sees culture as more complex context-specific and

dynamic For example Weisinger and Trauth (2003) examined the interaction

of national cultures the IT industry culture and a particular firm‟s

organizational culture They observed that the resulting situated culture ldquois

fluid contextually dependent and created by actors within a group who may

hold conflicting assumptions and world viewsrdquo In other words culture is as

what it is because of what it does This means that management must ensure

34

that key capabilities for example marketing analytics or process controls are

developed and nurtured across the organization

Successful global managers recognize that they cannot respond to every

unique opportunity that local settings offer Thus there is an inherent tension

in cultural sensitivity a management team which is ldquotoo sensitiverdquo to cultural

and structural features exposes the organization to the risks that come with a

lack of focus and coherence while managers who do not take cultural and

structural features into account expose the organization to the risks that come

with organizational rigidity (Myres and Tan 2002)

According to Mistry (1999) entrepreneurial networks and clusters in sub-

Saharan Africa have not generally produced the kind of strong transnational

links that characterize Asia‟s flourishing pattern of industrial diffusion The

author states that the reasons for this are complex differences in geography

different models provided by leading countries in the neighbourhood and

policies adopted by governments in the respective regions Chinese business

networks are responsible for some of the information ideas and capital that

helped launch the small Indian Ocean nation of Mauritius as an important

centre for export-oriented industry The Chinese networks in Mauritius also

continue to facilitate a role that Mauritius first began to play in the eighteenth

century they serve as a gateway for overseas Chinese entrepreneurs

interested in investing both in Mauritius and elsewhere in Africa (Mistry 1999)

35

27 Investing in Mauritius

There are a lot of advantages in investing in Mauritius The economy of the

country is stable and the graph of the economy and business is one the rise

for a considerable period of time The Mauritius government has undertaken a

sequence of strategic measures to support its course into offshore banking

manufacturing and financial services communication technology and tourism

keeping in mind the significance of foreign investment as a basis of

nourishment of the financial development (Dabee and Greenaway 2001)

According to Dabee and Greenaway (2001) tthere are various factors that

influence financiers to invest in Mauritius like accessibility of skilled labor

political constancy and venture-friendly institutions and regulations One of

the major factors for the development of Mauritius is the Foreign Direct

Investment (FDI) The government of Mauritius has given all the necessary

support to create the most favorable investment setting by the following steps

Building modern infrastructure

Endorsing suitable legislations

Commencing packages of investment inducements

Investing in human capital

Some of the advantages of investing in Mauritius are as follows

High-quality infrastructure with superb transportation

Democracy and a steady government

Free market financial system fastened on export slanting activities

Excellent system of sea and air transport

36

High standard of living good international schools

A highly educated bilingual and responsive work force

Knowledgeable financial segment providing outstanding services

Constructive market contact and good inducements ( IBP 2002)

Mauritius has various sectors where investment can be made like Information

and Communication Technology and manufacturing For doing business in

Mauritius registered trademark is required The trade marks for business are

issued by the registered Patents and Trademarks sector of Ministry of Foreign

Affairs International Trade and Cooperation In the country of Mauritius a

foreigner is eligible to hold 100 shares In this case one of the directors of

the company has to inhabit in Mauritius and the foreign individual has to

obtain a sanction from the Office of Prime Minister (IBP 2002)

In Mauritius the laws concerning income tax is based on the English law of

income tax The companies in Mauritius are lawfully accountable to pay out

income tax on their profits at an even rate of 25 A company which is

included in the country or has its scheming benefit in the country is measured

for tax reasons to be an occupant corporation To the Mauritius companies

various types of tax incentives are granted The companies that hold

certificate for Tax inducement are responsible to tax at an abridged rate of

15 while the scheduled companies are accountable to pay tax at the rate of

25 ( Dabee and Grrenaway 2001)

37

CHAPTER THREE

METHODOLOGY

Having looked at culture to some depth this chapter explains the methods

used in carrying out the study The study used mixed method approach to

allow for data corroboration and dynamism since the subject in question

needed dynamism and sensitivity in approach

This research mixed both qualitative and quantitative approaches to try and

get best possible research by combining both features because they

complement each other Quantitative data techniques condense data in order

to get a bigger picture whereas qualitative techniques are data enhancers

making it possible to see issues more clearly (Dawson 2002 Neuman 2000)

Attempt was made to keep in line with recommendation made in the Leeds

Declaration proposition number 6 which calls for the application of multiple

methods and perspectives to try and understand social and cultural issues

(Hunter and Lang 1993) Mixing qualitative and quantitative methods also

called positivist and interpretive respectively (Gilbert 2001 and Bowling 2002)

is effective in a complex issue study such as this one because they highlight

different perspectives of the same problem in this case - the public in parallel

with the individual level(Gilbert 2001) This is because quantitative methods

adopt a numerical approach to data collection and analysis to provide macro

level perspective whereas qualitative methods provide micro level perspective

through collecting data from individuals (Ibid)

38

There was also use of impersonal (public) documentation using official

records which were more library based research (Grbich 1999) on top of

theory generating field based methods (Ibid) Many researchers (Bowling

2002 Neuman 2000 Grbich 1999 Denscombe 2003 and Gilbert 2001)

concur that neither of the methods is superior to the other but just different

each having its strengths and weaknesses (Dawson 2002)

The study sought to explore the attitudes behaviour subjective meanings and

experiences of the participants making qualitative approaches best suited

because they emphasize the importance of context (Neuman 2000) However

to generate objective and factual (Maynard and Purvis 1994) statistical

figures quantitative research was more suitable Hence mixing of methods

(Dawson 2002 Denscombe 2003) to counteract weaknesses in both

approaches to give breadth and width to the study (Maynard and Purvis

1994) The flexibility of qualitative research allowed for re-focusing and

refinement of the tool dependent on participants‟ reactions throughout

(Neuman 2000) to pick up any emerging evidence thus applying the

grounded theory approach (Dawson 2002)

39

31 Research Setting

Mauritius is a volcanic island of lagoons and palm-fringed beaches in the

Indian Ocean Southern Africa east of Madagascar with a population of

about 12 million has a reputation for stability and racial harmony among its

mixed population of Asians Europeans and Africans The island has

maintained one of the developing worlds most successful democracies and

has enjoyed years of constitutional order since independence in1968 Over

the past three and half decades the country has been transformed from one

of the poorest in the world to a middle income country with per capita Gross

Domestic Product US $7000 (World Bank 2006) It has preserved its image

as one of Africas few social and economic success countries that mainly

depends on sugar and clothing export and a centre for upmarket tourism But

Mauritian exports have been hit by strong competition from low-cost textile

producers and the loss of sugar subsidies from Europe Consequently

attention has turned to diversification in line with global trends

To this end SMEs have been identified as important instruments to achieve

economic diversification Today the government vigorously supports SMEs

through a range of strategies eg the creation of a business friendly climate

via import liberalisation tax reforms and the launch of the SME Partnership

fund which gives subsidized loans to aspirant SME owners and makes the

availability of finance and facilitating access in particular for those enterprises

that have viable projects but are short of equity The Small Enterprises amp

Handicraft Development Authority (SEHDA) was created following the merger

of the Small amp Medium industries Development Organisation (SMIDO) and the

National Handicraft Promotion Agency (NHPA) The aim of the merger is to

40

rationalize and optimize the use of resources dedicated to the small business

sector in Mauritius

Various cultures and traditions flourish in peace though Mauritian Creoles

descendants of African slaves who make up a third of the population live in

poverty and complain of discrimination Mauritius was uninhabited when the

Dutch took possession in 1598 Abandoned in 1710 it was taken over by the

French in 1715 and seized by the British in 1810 The culture of the country

reflects its diverse ethnic composition There are many religious festivals

some important ones being (in random order) Divali (the hindu festival of

lights in October) Christmas Cavadee (a penitence festival of the south

Indian tradition of hinduism in January) Eid ul Fitr (celebrating the end of the

period of fasting in Islam As the Islamic calendar does not correspond to the

Gregorian calendar the date of its celebration in the year tends to vary In

2003 it was celebrated in November) With such a strong history diverse

culture and such a promising economy painted above makes Mauritius a rich

setting to investigate culture and small medium business entrepreneurship

32 Methods

As justified already this study applied method mix to exploit the benefits of all

methods used while minimising the effects of their weaknesses The obvious

benefit of method mix is that it involves more data which is likely to improve

the quality of research (Denscombe 2003) and that is what the researcher

sought to achieve In deciding which method to use it was acknowledged that

the chosen methods were not superior in any way but more suited to the study

41

circumstances based on the premise of ldquohorses for courses (Denscombe

2003 page 83)

A Questionnaire used in the online web survey allowed for collection of

data from large numbers of participants economically since the project had

financial and time limitations (Ibid) The other advantage of survey exploited is

generation of quantitative data However weaknesses of the method

(empiricism lack of depth and accuracy of responses) were a challenge The

questionnaire was open ended and was completed by the participant in the

absence of the researcher Any questions arising from the participant not

understanding or misinterpreting the question where not taken care of Focus

groups were used to gain depth into some of the emerging issues from

questionnaires to gain insights into the issues surrounding widow inheritance

and to validate some of the data (Denscombe 2003) Telephone and face to

face interviews were used to gather to gain in-depth information on the

issues

All accessible literature on culture and investment in Mauritius as well as

other parts of Africa was reviewed to get insight into any related work to

identify key issues and current knowledge gap so as to sign post this study for

any audience (Ibid)

42

33 Research Participants and sampling

It was difficult to get exact demographic data for each sector Consequently it

was not possible to use any scientific sampling techniques The study

therefore used non-probability sampling (Neuman 2002 Bowling 2002

Denscombe 2003) targeting urban based population

The sample baseline characteristics were

SME managers from aged 18 years and above and over 65 was the

limit Any religion faith Any socio-economic background and residents

of Port Luis and surrounding areas

To sample for quantitative data purposive and snowballing sampling

techniques were used because it was not possible to apply any statistical

formula in getting the samples since there was no single list of SME managers

and other stakeholders to use with any form of probability sampling

Participants were snowballed from one sector to another until the whole

sectors were covered For the focus groups homogenous and critical case

(Grbich 1999) sampling was used to get particular sub group to provide

details In this case to get government officials and the private sector who

were strong enough to talk about their experiences

A total of 161 participants were reached from all the sectors These included

SME manager government officials and the private sector The researcher

wishes to point out that these numbers were not conclusive The numbers

could be much higher because in case the researcher phoned the participants

they were not available to take the call there was no time to go back to

43

ascertain the details Those who were not willing to take part in the study were

also excluded from the above figures For the focus groups discussions 5

government officials and the private widows were invited and used Skype

technology to do a conference

The times when the participants were contacted met were entirely dependent

on participant availability and other events at the time (Gilbert 2001) It varied

between 800 am and 700 pm in the evening because of the time differences

UK and Mauritius time Care was taken to avoid compromising times such as

late in the evening or culturally sensitive days such as weekends when people

were engaged in funerals and church services in this case

The participants showed weariness towards the study because as they put it

ldquoa lot of people come along claiming to collect data to help but never show up

againrdquo

34 Data collection Instruments

The researcher developed an online quantitative data collection questionnaire

(web survey form) which was posted on the university web server with help of

the department technicians A multiple recipient list was created from the

details in the SEHDA website and was randomly sent to the recipients These

only included the SME managers from the seven sectors About 20 contacts

were selected from each sector which made a total of 140 participants

Telephone interviews were made to about 17 government officials and the

private sector who were later divide n to focus groups and a teleconferencing

44

was organised on Skype Face to face interviews were done with government

officials from the Mauritian High Commission in the UK

Apart from the questionnaire an Olympus VN 2100 PC Digital Voice Recorder

was also used during the focus group discussion with the permission of

participants also on telephone interviews and face to face interviews This

was tested set and correctly positioned by the telephone speaker before the

session began to ensure proper functioning It was fitted with a mini

microphone to improve recording quality The digital voice recorder small in

size (only 68 grams in weight) proved user friendly because it was not

intruding too much into the face of participants as opposed to older recording

devices There was a pair of AAA batteries on standby in case the batteries in

use ran flat during the session

35 Ethical Considerations

This study involved very little of sensitive issues but it strived very much to

adhere to the fundamental principles of Human Research Ethics of Respect

for Persons Beneficence and Justice The researcher ensured autonomy self

determination and protection of vulnerable persons through informed consent

participation confidentiality and thorough explanation of what the research

was all about to those with limited knowledge and education Any risk that

might have resulted from the study was minimised as much as practically

possible and the researcher took full responsibility for the protection of

participants There was no form of discrimination other than on participant

baseline characteristics

45

The study also upheld the six key ethical research principles as stipulated by

ESRC - UK (ESRC 2005) To ensure anonymity pseudonyms were used for

participants The information gathered was safely protected through password

use on the computer system and only the researcher had access to the

information The researcher was responsible for storage and destruction of

any information no longer needed such as audio files after transcription

Research respondents participated in a voluntary way free from any coercion

and free to withdraw at any point should they felt uncomfortable

The first ethical committee whose approval was sought was the University of

Sheffield Ethical committee after which the researcher sought ethical approval

from Mauritian authorities through the relevant ministries It was not straight

forward getting ethical approvals in Mauritian but ultimately the ministry of

SMEs approval was obtained

36 Procedure

After all the necessary approvals were obtained the researcher wrote an

explanatory letter (Grbich 1999) or bdquoparticipant‟s information sheet‟ (appendix

5) which included information on informed consent (Denscombe 2003)

After piloting the tools the researcher started by making calls to make

appointment for interviews As the quantitative data collection went on

recruitment of participants to take part in qualitative aspect was done

simultaneously due to time constraints The researcher used individual

judgement to asses those participants who would be courageous enough to

respond to the questionnaire online and to the interviews The managing

46

director for RCBusiness Support Ltd also provided a number of potential

respondents who were used at the initial stages of the study Each interview

session lasted averagely 50 minutes The researcher went to organise the

teleconferencing for the focus group on Skype which also lasted for average

50 minutes

37 Data Analysis

Since the distinction between quantitative and qualitative research is not

watertight (Denscombe 2003) data analysis embraced both because they

have similarities and differences (Neuman 2000) There was analysis of

words and numbers thus holistic versus specific focus (Denscombe 2003)

The analysis adopted a five stages approach (Denscombe 2007) The first

stage was data preparation followed by data exploration analysis

presentation and finally validation

Though some researchers champion for advanced inferential statistics

(Denscombe 2007) the researcher opted for descriptive statistics for the

quantitative data analysis because they still remain effective ways of data

analysis and presentation (ibid) The research data involved nominal as well

as discrete and continuous data which could effectively be analysed using the

chosen method The data was grouped frequencies were described and

finally any linkages were identified The end product of the analysis process

is presented in the results section in various formats Basic statistical

techniques were used to give the data additional credibility in terms of

interpretations of the findings (Denscombe 2007)

47

For the qualitative data the first thing was to back up the original voice

recorded focus group discussion into a password protected lap top This

ensured not only the security of the data but also a back up in case of data

loss The researcher then listened to the recording several times to familiarise

himself with the data after which transcription took place After that the data

was interpreted and categories themes were identified since thematic

analysis was employed The Putz (2000) model was used as a guide to

finding themes The findings are presented in the results section

38 Planned programme of dissemination

The study findings were disseminated to all relevant stakeholders in print

format including the university as part of the postgraduate degree requirement

in academically fulfilling format Two copies of the report were sent to the

Ministry of SMEs in Mauritius and two copies to the Board of Investment of

Mauritius in the UK as part of the requirements of ethical approval and

research permission granted by the ministry

Finally it was hoped that the report would meet publication requirements so

that it could get a wider audience through a reputable journal

48

39 Time scale

The study was anticipated to take the following breakdown from the time all

ethical approvals and consent were obtained

Table 1 Table showing the study time scale

Stage Time allocation Action item Accountable person

I Weeks 1 - 3 Research set up Sampling and

access to participant negotiations

Angelinah Boniface

II Weeks 4 - 12 Data collection and Analysis Angelinah Boniface

III Weeks 12 - 16 Analysis Report writing and

dissemination

Angelinah Boniface

310 Limitations and Delimitations

This study was not fully funded as such high telephone costs travelling

affected the exercise Only business people in Mauritius both men and women

were interviewed The study covered both local and foreign investors

Participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

49

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

A major limitation is a low response rate of the questionnaire and therefore a

representative sample of the SME population was not achieved Thus any

conclusions made from the analysis of the collected data cannot be

generalized to the broader SME population Bias may have been inadvertently

introduced during interviewing caused from such things as leading questions

50

CHAPTER 4

RESEARCH FINDINGS AND DISCUSSION This chapter aims to discus the research findings from the study The chapter

is divided into two sections the first part presents and discusses the

quantitative data and the second part discusses qualitative It is therefore

worth mentioning that the Putz (2000) model was used to guide the

qualitative data analysis and some of the themes were taken from the model

and some were generated from the research findings It must be noted that

any findings uncovered from this study cannot be generalized to the broad

public domain regarding SMEs

Section A of the questionnaire and the interview guide included questions that

collected background information on the SME managers and the responding

firms These data constitute the substantive material for analysis in the

ensuing sections The tables below depict the socio demographic

characteristics of the survey participants age group gender educational level

and experience as ownermanager In the following sections there aspects

are discussed

51

41 RESPONDENTS RATE ACCORDING TO SECTORS

TABLE 2

SECTOR SEHDAS SURVEY SENT

SURVEY RECEIVED

RESPONSE RATE

Leather and Garments

1678 20 12 60

Wood and Furniture

2196 20 11 55

Paper Products and Printing

1541 20 9 45

Chemical Rubber and Plastic

1376 20 11 55

Pottery and Ceramic

793 20

17 85

Jewellery and Related Items

1674 20 13 65

Fabricated Metal Products

1267 20 14 70

TOTAL 7 140 101 72

Table 2 shows the response rates from various sectors of SME in Mauritius

which were targeted by the online survey As the table indicates pottery and

ceramic sub sector had the highest response rate (85) with paper products

sector giving the least response rate (45) Overall 72 response rate from

all the targeted sectors was satisfactory It is worth mentioning that the total

number of participants adds to 140 since this question was only directed to

sectors not to other stakeholder in the research sample

52

42 DEMOGRAPHIC PROFILE PARTICIPANTS

TABLE 3 AGE GROUP AS PER PARTICPANT

AGE GROUP FREQUENCY PERCENTAGE

-25 7 43

26-35 34 211

36-45 53 329

46-55 35 217

56-65 22 137

gt 65 11 63

TOTAL 161 100

Evidence from most of entrepreneurial literature suggests that self-

employment becomes an increasingly attractive option as one nears middle

ages As can be seen in table 3 respondent‟s ages ranged from 25 to 65 and

the largest proportion (329) of the participants was in the age range of 36ndash

45 Additionally participants were biased towards the age ranges of between

36 and 65 and away from the under 25 and over 65

TABLE 4 GENDER PROFILE AS PER PARTICIPANT

GENDER

Male 116 720

Female 45 280

TOTAL 161 100

53

In relation to gender the research sample was predominantly male (72) a

striking although unsurprising demographic characteristic that reflects the

composition of the larger business sector in the country as a whole

Consequently only (28) were females This is clearly illustrated in table 4

above

TABLE 5 EDUCATION PROFILE AS PER PARTICIPANT

EDUCATIONAL LEVEL

Primary 8 50

Junior-level 29 180

O-level 78 484

Diploma 34 211

Higher Degrees 12 75

TOTAL 161 100

As evident from table 5 the educational levels attained by respondents varied

considerably as follows Primary School Certificate (8 or 5) Junior

Certificate (29 or 180) Ordinary Level (78 or 484) Diploma (34 or

211) and higher Degrees (12 or 75 ) On the whole though the data

suggest that the educational levels of our respondents are low the largest

proportion (398) possessing an Ordinary Level certificate

54

TABLE 6 YEARS EMPLOYED AS CEO AS PER PARTICIPANT

Years Of Employed as CEO

0-3 44 273

4-7 88 546

8-14 15 94

15-19 11 68

Over 20years 3 19

TOTAL 161 100

Not surprisingly table 6 shows that most of the responding executives did not

have education that emphasized a business curriculum This can be

understood with respect to the Mauritian educational curriculum which largely

overlooked business subjects until very recently

The research sample participants had been employed at their current firms on

average 1467 years and had an average of 12 years experience in the

manufacturing industry Four predominant job titles used by the senior

executives emerged from the questionnaireinterview responses Managing

Director (38) Director (26) Manager (20) and Chief Executive Officer

(16)

55

43 CHARACTERISTICS OF RESPONDING FIRMS

This section presents the descriptive statistics of the responding firms The

description focuses on age of the firm employment size firm revenues and

firm ownership

TABLE 7 COMPANY AGE PROFILE

Age of Company Frequency Percentage

1- 3 years 44 314

4- 6 years 68 486

7-10 years 19 136

11-15 years 7 50

Above 15 years 2 14

TOTAL 140 100

Table 7 displays the statistical data Of the firms responding the largest

proportion (486) was 4 to 6 years old Overall the sample reveals a skewed

distribution towards the ranges between 4 and 15 Also it is interesting to note

that 915 of the responding firms are mature that is beyond the start-up

phase

TABLE 8 EMPLOYEE PROFILE AS PER PARTICIPANT

Number of Employees

50-99 101 721

100-200 39 279

TOTAL 140 100

56

Unsurprisingly the vast majority of the responding businesses had fewer than

100 employees as depicted n table 8 with the largest proportion (701) in

the 50ndash99 employee categories The study found out that most small

companies would opt to have family and relatives as employees to minimise

costs Only 32 average of the firms were medium-size The preponderance

of small firms in the sample mirrors a more general pattern of firm distribution

in the country where medium and large firms are a conspicuous small

minority

TABLE 9 ANNUAL SALES AS PER COMPANY

Annual Sales

Less than R100 000 88 629

R101 000- R250 000 36 257

R251 000- R15 million 11 79

Above 15 million 5 35

Total 140 1000

As shown in table 9 the largest proportion of responding firms 88or 629

achieved a turnover below R10000000Only scant 11 or 79 posted annual

revenue in excess of R15 million

57

TABLE 10 OWNERSHIP AS PER PARTICIPANT

Ownership

Wholly Citizen 76 550

Joint Venture 42 293

Foreign Owned 22 157

TOTAL 140 100

Regarding ownership table 10 shows that an overwhelming majority or 550

of firms were wholly citizen-owned while the remaining 293and 157

were joint venture with citizen stake and foreign-owned respectively

44 Language

From most of the participants investors do not have to learn Local Mauritius

language since English and French are the official languages in the country

Since most of the investors to Mauritius are either English or French speaking

language as such is not a barrier to business practices and success for

prospective investors

ldquohellipwell it is not very important for foreign investors to learn languages

spoken in Mauritius because we can speak both English and Frenchrdquo

[Participant A5]

ldquohellipactually language is not barrier to English or French speaking investorsrdquo

[Participant A21]

58

Language is perhaps the most complex and perplexing aspect of the

Mauritian social mosaic (Rassool 1996) Contrary to the results that show that

language is not a problem for investors since most of the investors who come

to Mauritius are English or French speakers who normally fits well in the

society since these are the two official languages

This intricacy derives from the number of languages spoken combined with

the uses to which they are put and the socio-political connotations they bear

Baker and Stein (1977) scholars studying language use in Mauritius have

found that English is associated with knowledge French with culture

Creole with egalitarianism and other languages ancestral heritage

Consequently although Creole is the most widely spoken language in the

country French predominates in the media and English is the official

language of government and school instruction (Stein and Baker 1977)

According to the 1983 census the top five languages were Creole 541

Bhojpuri 204 Hindi 115 percen French 37 and Tamil 37 These

figures indicate the principal language used in the home Most Mauritians

however speak several languages

Literature suggests that global organizational structures need to adopt

common rules and procedures in order to have a common bdquolanguage‟ for

communicating across cultural borders (Kostova 1999 Kostova and Roth

2003 Gupta and Govindarajan 2000) This is directly reflected by the results

above that foreign investors need not to learn the local language of locals but

its important to create a common language within the organisation that is

59

understood by all stakeholders in the organisation for effective and efficient

communication

45 Religion

The study found that main religions in Mauritius are Hindu Muslim and

Christianity to a lesser extent Hindus make up approximately half of

religiously affiliated Mauritians Of the remaining Mauritians approximately a

third are Christians and about 15 Muslim followed by small Buddhist and

Sikh communities It is therefore imperative that a foreign investor considers

religion of the people of Mauritius before setting up a business Religion

The study also found out that various religions found on Mauritius tend to play

a major part in the islands cultural events and churches temples and

mosques are to be found everywhere Hindu and Tamil celebrations are part

of Mauritian cultural life

ldquohellipFestivals such as Divali (the festival of lights) Holi (in which participants

are covered in colourful powders) and Thai Poosam in which Tamil devotees

pierce their bodies with masses of needles as an act of penance are

popularly attended by Mauritianshelliprdquo [Participant A60]

ldquohelliphellipthere are also a number of diverse practices and superstitions

originating in beliefs brought from Africa and Asia Local sorcerers known as

longanistes or traiteurs are sometimes called in to settle arguments exact

revenge or administer love potionshelliphelliprdquo [Participant B41]

60

However all communities live together in harmony with each other regardless

of religion the study learnt

hellipHarmonious separatism is how we characterise our communal relations

in Mauritiushellip [Participant A13]

Since all citizens are ldquodescendants of slavery there are no tribes unlike

other African countries This has made integration and assimilation easier and

it makes it very easy for any SME to adapt to the local conditions due to pre

existing harmonyrdquohellip [Participant A13]

It is worth noting that businesses remain closed in public religious days but

the purchasing power remains the same regardless of whether it‟s a public

holiday or not

ldquohellipthe demand is not dependent on whether itrsquos a holiday or nothelliprdquo

[Participant A11]

ldquohellipit doesnrsquot matter really whether its holiday or religious holidayhelliprdquo

[Participant A21]

According to Stein and Baker (1977) the Mauritian society is noteworthy for

its high degree of religious tolerance Mauritians often share in the

observances of religious groups other than their own In part as a result of the

multiplicity of religions Mauritius has more than twenty national holidays In

addition the government grants subsidies to all major religious groups

61

according to their membership (Stein and Baker 1977)This is also evident

from the results of the research

Ethnicity religion and language have been important factors in shaping the

way Mauritians relate to each other in the political and social spheres Despite

the fact that sectarian factors are less of a determining factor in peoples

social and political behaviour they remain an important clue to the peoples

past and self-identity (Rassool 2001) As a foreign investor understanding

the religious belies of a society and taking all the necessary details in to

consideration play a major role in an international business environment

setting (Hosftede 1980) For example observing religious holiday and making

sure employees get days off and annual leaves on such important days

having prayer rooms for those willing to pray at work and creating a non-

discriminatory environment for all employees

It is worth mentioning that while religion does not have a direct impact on

Mauritius investment since it an international business hub However it is

important for investors to take note of all the aspects of religion since it plays a

very important role in lives of the Mauritians For example there are religious

holidays as an employer it is important to follow the religious holiday calendar

and give annual leaves to employees on such important days

46 Social Life

For the interest of prospective investors the study found that the social life in

Mauritius is very much close to families and friends People all meet at open

markets for normal shopping and socialise over weekends ldquoeven ministers

62

managing directors of big companies go to open marketsrdquo [Participant

A12]

There is no busy night life in the country as well as cinema and theatres

because most people prefer home video entertainment ldquoMost people found at

social places like cinemas pubs clubs etc are employees and not

employersrdquohelliphellip [Participant A12] Prospective investors should therefore

know that they are likely to meet business associates at board rooms or at

their offices rather than at social centres

In a society where tolerance is a national virtue and ethnic conflicts are

invisible to the casual visitor it takes time to learn the dos and donts of

socialising ldquohelliphere in Mauritius you must realize that we walk on eggs

continuouslyhelliprdquo [Participant B36] For a peaceful and tolerant as Mauritius

undoubtedly is the diverse groups populating the island do not collectively

make up a nation Mauritius like any other island is a nation of nations and

compromise is the order of the day be it in politics in the economy in the

media or at a dinner party the study found

The study found out that unlike other African societies Mauritius people would

prefer to stay at home and watch movies play video games with kids or visit

friends and relatives to socialise or for a night out There are not many social

night clubs in Mauritius as compared to the United Kingdom ldquohellipmany homes

today have a Digital Video Decoders (DVD) sets and donrsquot see the importance

of going out to cinemas and would helliphelliphelliprdquo [Participant A12]

63

This does not come as a surprise since literature suggests that Mauritius

though it is multicultural society and an international hub for business there

are a quiet peaceful and tolerant nation and would prefer to keep their space

(Stein and Baker 1977)

47 Market Accessibility

The study found that as first foreign investor Mauritius government has open

market programme When the free operational zone initiative began investors

imported raw materials imported duty free and foreign companies had to

show transformation of raw materials into fished exports since the

government‟s aim was to increase exports thus improve balance of trade

However in the early stages the initiative did not work as expected because

of certain barriers

Lack of adequate government incentives to lure more investors

Too much repetition meaning most of the companies where doing the

same thing

Lack of skilled human resources

The scenario is summarised by participant B3 in the following

statementldquohelliphellipour people did not have culture of businessrdquo

For more access to the markets further initiatives were put into place The

government assured investors of freedom of capital movement that is the

investors were guaranteed that they would bring their money into and out of

the country whenever they felt like doing so In addition the government

64

embarked on providing more facilities (industrial buildings) and infrastructures

all over the country opening up rural areas because towns already had

infrastructures Lastly first time investors were provided with free access to

customs thus maintaining the earlier option of tax free imports

While Mauritius was doing all these events elsewhere in the world played to

their favour European Union and USA were imposing import quotas on

Chinese and Indian imports to prevent damping So these investors had to

look for alternative markets and Mauritius turned out to be one of such

markets But the government had to act quickly to avoid bdquotransit investors‟

ldquohellipthey are investors who want to do business when it favours them but when

they begin to loose certain privileges or profits get diminished then they take

offrdquohelliphellip [Participant B3]

To avoid this foreign investors were made to transfer skills and knowledge to

local community which led to emergence of Mauritius community of

manufacturing

ldquowho started from easy stitching like socks pyjamas bras etc and later

upgraded to big Mauritius labelshelliprdquo [Participant B3]

The study further found that the initiative did not stop there The government

further established Mauritius Enterprise Development Investment Authority

(MEDIA) in 1985 which took lead in looking for prospective investors from

65

Europe USA Hong Kong and India among others Any willing investor was

transported to Mauritius and accommodated freely on government accounts to

tour the country and carry out investment feasibility studies This helped to

popularise the investment opportunities in Mauritius and attracted many more

investors Currently MEDIA has been transformed into Mauritius Board of

Investment which is no longer in charge of managing industries but

ldquopromotes Mauritius businesses abroad and participates in trade fairs to

further open uprdquo [participant B3]

The study also found out that there are specific niche markets for foreign

investment in Mauritius namely the Offshore Industry the Financial Industry

the Construction and Tourism especially in the area of high class luxury

property market in form of villas hotels and apartments and of recent the

Information Technology (IT) industry These industries cover a large spectrum

including SMEs

ldquohellipone of these sectors makes a very good investment for any investor

especially the construction industryhelliprdquo [Participant A89]

The results agree with Putz (2000) which notes that niche markets make

establishing a business by immigrants easier because the immigrants needs

for consumer goods create a specific demand This is evidence by all the

incentive the Mauritian government have put in order to attract foreign

investors in to country for the benefit of the Mauritian population Furthermore

Putz (2000) emphasise the opportunities offered by the host country including

66

access to the market and job market conditions as important factors for

international business

48 The role of ICT to SME business in Mauritius

The study found that Mauritius has a very well established ICT sector It has

formed the backbone of SME success in Mauritius As early as 1990 the

country provided hellip ldquothe fastest broadband in the world to help SME business

investors who were each allocated free 2MB internet accessrdquohellip[Participant

A 23] Recently the government has in turn invested a lot of money in

developing a cyber city a few kilometres away from the capital Port Louis

which will form the hub for future investments

This high level of ICT development in the country has created SME in areas

such as offshore financial services calls centres and enhanced tourism

industry growth Any prospective investors are guaranteed of highly

developed ICT backed up by highly qualified local human resources The

offshore investment sector has even been further boosted byhellipldquobilateral

agreements with India allowing companies registered in Mauritius to transfer

funds to India tax freerdquohellip[participant B13]

It is hoped that in helliprdquo5 years time the whole island will have free wifi

connectivityrdquo participant B33 The country not only makes use of its advanced

ICT sector but has become a big player in the region as well For example

Mauritius state informatics computerised South African government in 1996 It

has also won other computerisation contracts in Zambia Zimbabwe Namibia

Kenya and Ghana To sustain such success ldquopartnerships have been formed

67

with global players such as Microsoft to provide training not just to Mauritius

nationals but other scholars from the South Eastern Africa region as

wellrdquohellip[participant B13]As matter of fact the government of Mauritius has

invested billions in building s cyber-city a few miles aware from the capital

Port Louis

ldquoits opening in July this year and it is expected to be the centre of attraction

for investorsrdquo [Participant B13]

ldquoactually the government invested in this cyber-city with the intention to

attract European and American investorsrdquo [Participant A6]

From these results there is evidence that technology plays a major role in

SME development Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

68

48 Governance and the role of women in SME sector

in Mauritius

Mauritius is a multicultural country with ldquo70 of the population of Chinese

Indian ancestry 2 white French origin and the remaining mixed race ndash

creolesrdquo [participant A17] Europe has not have a lot if cultural influence on the

country and predominant cultures are Asian African cultures Study found

that common folklore popular songs in Mauritius would also be ordinary

found on other African countries such as Senegal Mozambique Cameroon

and Sierra Leone among others signifying deep rooted African traditions

The government maintains ndash discrimination laws for either gender In the early

stages of SME development women provided the bulk of the labour in the

rural areas as industries moved away from cities into the rural areas There

are concerted efforts to get women into jobs especially leadership roles

ldquowomen themselves are too slow to act and take advantage of the

government incentivesrdquo

The study found out that woman in Mauritius do not occupy positions of

strategic power decision making This is not a surprise because it is the same

with most Southern African countries The government of Mauritius has put a

lot of structures to support women in business but women are taking it slow to

utilize these structures

69

There are many government agencies and organizations headed by women

and even cabinet posts but most women would rather stay out of politics

becausehelliphellipldquopolitics can get very dirty involving personal lives of politicians

which men donrsquot mind but women do mind a lot aboutrdquohellip[participant A 17)

However in other sectors like education and healthcare there are many

women represented in the labour force

The study also found out that just like any other society one can not ldquohellipstop

some kind of abuse for both males and females There are cases of both

female and male harassment but the law comes in to protect such victims

There are also cases of petty crime and rape involving women either as

perpetrators or victimsrdquohellip [Participant A13]

According to AllAfrica Global Media (2008) the winds of change are blowing

across the island of Mauritius and many men in this traditionally conservative

nation are working hand in hand with women to see that the common sense of

gender equality prevails The absence of women at the decision-making table

usually means the absence of their priorities and needs Irrespective of the

Southern African Develoment Community (SADC) Declaration there are so

few women in politics This is evident from the results of the study which found

that women will rather do health jobs and education than to play the dirty

tricks of politics

Women councillors make up a mere 37 in the Moka-Flacq District Council

This is the lowest figure not only in Mauritius but also in the SADC region

70

This is far from the 2005 30 target not to mention the 50 goal now being

set for the region and included the draft Protocol on Gender and Development

up for review at the August SADC Heads of State Summit ( AllAfrica Global

Media 2008)The results found out that there is also a few representations of

women in business Women do mostly the dirty jobs of caring for children and

their families and do not have the courage to enter the business sector This is

not surprising especially in the SADC region women play the minority role

and are rarely represented at the strategic decision making level hence their

needs are always neglected resulting in women poverty

49 Challenges faced by the country and hence SME investors

Stiff competition from other countries such ashelliphellipldquoBotswana Vietnam and

South East Asia in the textile industry due to cheap labour Maldives and the

Caribbean Islands for tourism difficult in Training enough qualified personnel

in ICT to cope with demand International competition and access to fundsrdquo

hellip[participant B13]

To face these challenges the study found that the country has expanded

tertiary education and formed partnerships with foreign universities such as

ldquoFrench Scientific University which has been running Medical school in

Mauritius for 10 years By the time of this study an agreement had been

reached by Thames valley university (UK) to open up campus in

Mauritiusrdquohellip[participant B15] The aim of the government is to offer high

quality education to students from the region as well as far away like China at

affordable cost and to compete with European universities Further to

71

educational development the study also found out that the country is striving

to create partnerships with ldquoresearch organisations and to create high quality

healthcare so as to benefit from health tourism where would just travel to the

country to get affordable high quality specialised health carerdquohelliphellip [Participant

A3]

Finally results show that there is stiff competition from different sectors of

business and other force which needs to be taken into consideration when

doing business internationally Globalization tends to redistribute economic

rewards in a non-uniform manner a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) It essential to know all

the factors surrounding the business sector and understanding all the

business practices before investing to avoid any loss

72

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

Research on culture and IB is definitely a bdquogrowth‟ area because the business

world is in many ways becoming one The researcher concluded the following

based on study findings

Firstly the cultural diversity and harmony of the island make Mauritius a

unique place in the world It is also known for its social peace political stability

and racial harmony Its steady economic growth over the years coupled with

its nation‟s social cohesion and prosperity ensure continuing development

Secondly Mauritius enjoys a literacy rate over 80 percent Skilled labour

graduates and qualified professional including lawyers engineers IT

programmers consultants accountants and chartered secretaries are

available to suit virtually all business needs in two international languages

English and French Language is therefore not a barrier to foreign investment

In addition academic training at the University of Mauritius and the newly

established University of Technology a comprehensive system of vocational

training through the Industrial and Vocational Training Board (IVTB) ensures a

ready supply of skills in a number of fields such as tourism engineering

electronics jewellery ICT printing and textiles

Thirdly In view of the importance of foreign investment as a source of

sustenance to economic growth the government of Mauritius has taken a

series of policy measures to encourage its flows into manufacturing offshore

73

banking and financial services information technology communication and

tourism As far as foreign investors are concerned Mauritius offers itself as an

attractive destination because several positive features such as political

stability availability of skilled labour and investment-friendly rules and

institutions

Fourthly after a sustained growth path over the last three decades based on

sugar textiles and tourism Mauritius is now shifting gears to move towards a

higher stage of economic development so as to consolidate its position as a

premier international hub Foreign Direct Investment (FDI) has played an

important role in the development of Mauritius and will again be decisive when

the country embarks on high value-added capital intensive and knowledge-

based activities

Fifthly the government plays the role of a facilitator and has endeavoured at

all times to create the most conducive investment environment by enacting

appropriate legislations building state-of-the-art infrastructure investing in

human capital and introducing packages of investment incentives for the

manufacturing financial services and ICT sectors so as to enhance the image

of Mauritius

In this respect the Board of Investment (BOI) is the first contact point for

anyone investing in Mauritius Operating under the aegis of the Ministry of

Finance the BOI was established in March 2001 under the Investment

74

Promotion Act to give a new impetus to foreign direct investment The BOI is

the apex organization for the promotion and facilitation of investment in

Mauritius The primary role of BOI is to stimulate the development expansion

and growth of the economy by promoting Mauritius as a competing business

and service centre It aims at streamlining the legal framework and to make

better provision for the promotion and facilitation of investments in Mauritius It

acts as a facilitator and provides a one-stop shop service to both local and

foreign investors ensuring reliable and speedy processing of applications The

BOI receives processes and approves all applications for investing in

Mauritius It also assists investors in obtaining the necessary secondary

permits and clearances from relevant authorities thus ensuring a speedy

implementation project

Six Mauritius pursues a liberal investment policy and actively encourages

foreign direct investment in all sectors of the economy Attractive packages of

both fiscal and non-fiscal incentives tailor-made to the needs of each priority

area of development are offered to investors Excellent opportunities for

investment in Mauritius exist in various sectors of the economy including

manufacturing information technology knowledge industry regional

headquarters tourism and leisure financial services Freeport activities

amongst other sectors Some of the priority areas are in Information and

Communication Technology which is set to a play a lead role in the economic

development of the country in the medium and long terms The availability of

high bandwidth connectivity (with SAFE Project and international Gateways)

at near global parity in quality and tariff on the one hand and the setting up of

75

dedicated IT habitats including the Cyber city at Ebeacutene on the other hand

plus total Government support to this industry are testimony of the importance

of this industry to Mauritius Others include the manufacturing sector textiles

and apparel the spinning sector electronics and light engineering medicals

and pharmaceuticals agro-business leather products and jewellery and

watches

The export-oriented manufacturing sector has been the backbone of the

Mauritian economy for the past three decades This sector remains a major

constituent of the Mauritian economy in terms of foreign exchange earnings

employment and contribution to GDP and is called upon to continue to play

an important role in the consolidation and diversification of the industrial base

of the country certain

Lastly some incentives provided by government to foreign investors In the

manufacturing sector these include among others

No customs or duty or sales tax on raw materials and equipment

No tax on dividends

No capital gains tax

Free repatriation of profits dividends and capital

50 relief on personal income tax for expatriate staff

New incentives for the ICT Sector consist inter alia of

the availability of tax holiday up to year 2008 for specified

pioneering high-skills ICT operators typically geared towards the

export market such as software development multi-media and to

high-level ICT training institutions

76

customs duty-free import of ICT and similar equipment

50 relief of personal income tax for a specified number of foreign IT

staff

duty-free import of personal belongings of foreign IT staff

effective fast track procedure for procession of visa and work

permits for foreign staff including spouses

From the above the research concludes that Mauritius being a multicultural

society as it is the culture they share does not have a direct impact on

investment in Mauritius because of it is an international hub for business It is

also expected that from the results the situation is not going to change after

time but will keep in this shape for a long since it is the government incentive

to attract more investors into the country However there are certain aspect of

culture eg believes that foreign investors need to understand and take into

consideration This study recommends any prospective investor to make good

investment in to Mauritius without fear

77

CHAPTER SIX

REFLECTIONS FROM THE STUDY

The views derived from this study might not be directly applicable to the whole

region because of variations in socioeconomic settings in various parts of the

Mauritius Also views expressed in this study were obtained mainly from

urban based managers and respondents and might not be similar to rural

based SMEs from the same community or area

Some scholars might not support the sampling techniques used but they

were the most practicable given the circumstances

Legal practitioners in Mauritius were supposed to be part of the sample but

they were hard to reach with some declining to participate

Demographically and geographically the sites were larger than anticipated

given the time and resources available for the study

Lastly the study was limited to the previous 20 years which might have

yielded same generational trend missing the opportunity to get data across

various generations within the sites

78

CHAPTER SEVEN

FUTURE RESEARCH

With more funding and resources a similar study could be conducted

throughout a wider geographic region and encompassing all categories of

SMEs micro small and medium Furthermore with more time a greater

number of interviews could be conducted which would provide richer data that

would be more in depth for conclusive analyses to be made Additionally

participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

79

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

WORD COUNT 16 969

80

APPENDICES APPENDIX 1 MauritiusData Profile

2000 2005 2006

World view

Population total (millions) 119 124 125

Population growth (annual ) 10 08 08

Surface area (sq km) (thousands) 20 20 20

Poverty headcount ratio at national poverty line ( of population)

GNI Atlas method (current US$) (billions) 444 653 681

GNI per capita Atlas method (current US$) 3740 5250 5430

GNI PPP (current international $) (billions) 891 1239 1334

GNI per capita PPP (current international $) 7510 9970 10640

People

Income share held by lowest 20

Life expectancy at birth total (years) 72 73 73

Fertility rate total (births per woman) 20 20 20

Adolescent fertility rate (births per 1000 women ages 15-19) 39 40 41

Contraceptive prevalence ( of women ages 15-49)

Births attended by skilled health staff ( of total) 100 99

Mortality rate under-5 (per 1000) 18 15 14

Malnutrition prevalence weight for age ( of children under 5)

Immunization measles ( of children ages 12-23 months) 84 98 99

Primary completion rate total ( of relevant age group) 105 97 92

Ratio of girls to boys in primary and secondary education () 98 100 103

Prevalence of HIV total ( of population ages 15-49) 06

Environment

Forest area (sq km) (thousands) 04 04

Agricultural land ( of land area) 557 557

Annual freshwater withdrawals total ( of internal resources)

Improved water source ( of population with access) 100

Improved sanitation facilities urban ( of urban population with access) 95

Energy use (kg of oil equivalent per capita)

CO2 emissions (metric tons per capita) 23

Electric power consumption (kWh per capita)

Economy

GDP (current US$) (billions) 447 629 635

GDP growth (annual ) 40 46 35

Inflation GDP deflator (annual ) 37 48 41

Agriculture value added ( of GDP) 6 6 6

Industry value added ( of GDP) 31 28 27

Services etc value added ( of GDP) 63 66 68

Exports of goods and services ( of GDP) 63 57 60

Imports of goods and services ( of GDP) 65 61 67

Gross capital formation ( of GDP) 26 23 25

Revenue excluding grants ( of GDP) 220 214 215

Cash surplusdeficit ( of GDP) -11 -21 -30

States and markets

Time required to start a business (days) 46 46

Market capitalization of listed companies ( of GDP) 298 416 567

Military expenditure ( of GDP) 02 02

Fixed line and mobile phone subscribers (per 100 people) 39 82 90

Internet users (per 100 people) 73 241 145

Roads paved ( of total roads) 97

High-technology exports ( of manufactured exports) 1 2 24

Global links

Merchandise trade ( of GDP) 82 84 91

Net barter terms of trade (2000 = 100) 100 109 115

External debt total (DOD current US$) (millions) 1713 2153 1997

Short-term debt outstanding (DOD current US$) (millions) 767 1363 1363

Total debt service ( of exports of goods services and income) 181 72 71

Foreign direct investment net inflows (BoP current US$) (millions) 266 39 107

Workers remittances and compensation of employees received (US$) (millions)

177 215 215

Official development assistance and official aid (current US$) (millions) 20 34 19

Source World Development Indicators database April 2008

81

APPENDIX 2

SUMMARY GENDER PROFILE (Mauritius)

Mauritius

Sub-Saharan Africa

Upper middle income

1980 1990 2000 2004 1980 2004 1980 2004

GNP per capita (US$) 1210 2300 3690 4640 652 601 2391 4769

Population

Total (millions) 10 11 12 12 3850 7258 4394 5762

Female ( of total) 507 501 502 503 503 501 515 514

Life expectancy at birth (years)

Male 63 66 68 69 47 46 63 66

Female 69 73 75 76 50 47 71 73

Adult literacy rate ( of people aged 15+)

Male 848 884 954

Female 750 805 942

LABOR FORCE PARTICIPATION

Total labor force (millions) 0 0 1 1 157 299 193 256

Labor force female ( of total labor force)

37 34 34 35 43 42 42 41

Unemployment

Total ( of total labor force)

33 88 102 12

Female ( of female labor force)

36 96 126 134

EDUCATION ACCESS AND ATTAINMENT

Net primary school enrollment rate

Male 91 96 94 68

Female 92 97 96 60

Progression to grade 5 ( of cohort)

Male 97 99

Female 98 99

Primary completion rates ( of relevant age group)

Male 61 105 98 66 95

Female 63 104 102 56 96

Youth literacy Rate ( of people aged 15-24)

Male 912 937 978

Female 911 954 974

HEALTH

Total fertility rate (births per woman)

27 23 20 20 67 53 31 20

Contraceptive prevalence ( of women aged 15-49)

75 26 76 22 69

95

82

APPENDIX 3

DATA COLLECTION FORM FOR THE SURVEY Sitehelliphelliphelliphelliphellip Participant numberhelliphelliphelliphellip MANAGING DIRECTOR CEO MANAGER

Age group -25 26 ndash 35 36 - 45 46-55 56-64 65+

Education Nursery ndash Standard 4

Std 5 ndash 7 (8) Form 1 ndash 2

Form 3 ndash 4 or A level

College University

Employment Yes No Business (what type)

Partnership Whole Citizen

Joint Venture

Age of Company

1-3 years 4-6 years 7-10 years

11-15 Above 15yrs

Number of Employees

10-25 50-99 100-149 150-200

Place of birth

In the constituency

Outside the constituency

Where

Residence Rural Urban Where

Before starting business

After business

Children

Boys Number

Girls Number

Any born a Yes None

Are they in school

Yes No Some

Working Yes No Some

Annual Sales

Balance Sheet

Less than R1000000

R101 000- 250 000

R251 000- 15 million

R 15 million +

Years Employed as CEO

0-3 4-7 8-14 15-19 Over 20 years

83

APPENDIX 4 Qualitative data questionnaire The following questions were used as a guide during the focus group discussions However they were not followed in the strict order or wording as they appear here

SOCIAL INCLUSION EXCLUSION

I am going to ask you questions regarding support you think the society could give foreign investors There is no right or wrong answers it is just about your opinion

a) How do you feel about foreign investors coming to Mauritius

b) How has your friendship with foreign business before and after they arrive in Mauritius

c) Do you keep in touch with foreign businesses around you and prospective investors

d) In your opinion how does foreign business feel about Mauritius

e) Are foreign businesses doing well or badly

f) What support structures or government incentives are there for foreign investors

g) What kind of support would you like to receive from the government

BUSINESS ATTITUDE AND BELIEFS

I am now going to ask you some general questions about business and your opinions about it

a) How would you describe the general business environment

b) Do you find it difficult to do business with people from different countries of the world Why

c) What do you believe the first thing to do on the morning before opening

your business (Local people) Why

d) How best can the Mauritius people be motivated into business How do you get over them

84

e) What areas do local people consider as niche areas for foreign

business

f) How do local people organize their business Why

g) As a local business person what would you consider as abomination of business in Mauritius Why

h) What is the role of women in the business sector

CULTURE

I am now going to ask you questions about the your culture

a) What are your views about business culture in Port Louis

b) What are the challenges of national culture on business practices in your opinion

c) What are the benefits of culture on business practice

d) Do you think foreign investors need to know the local language when investing in Mauritius

e) If you were to advice a foreign investor what would you want them to know about Mauritius

f) How do you think the family daily practice influences business in

Mauritius

g) What business actions of behaviors are sensitive to the local people

h) How best can foreign investors assimilate with the local business people

i) What do local people like to buy on weekends week days public religious holidays

j) What marketing strategies violet the culture of Mauritius ndashwomen naked Eating behavior Etc

85

APPENDIX 5

Introductory letter consent form

TITLE CULTURE AND INTERNATIONAL BUSINESS

ENTREPRENUERSHIP A CASE STUDY OF MAURITIUS

INTRODUCTION

I am Angelinah Boniface a student pursuing Masters of Science in

Information Systems the University of Sheffield United Kingdom I am

conducting a study on the Impact of culture on small and medium

enterprises for my dissertation The study is expected to last 3 months and a

report of the findings will be availed to all interested stakeholders including the

university as part of course requirements

PURPOSE OF THE STUDY

This study is intended to gain insight into views and opinions about

widowhood and inheritance in relation to health and well being of participants

and the community at large Evidence from this study may be useful in future

government and development agencies‟ planning and provision of relevant

interventions for the benefit of the whole community

VOLUNTARINESS AND CONFIDENTIALITY

Your participation in this study is purely voluntary and you can withdraw

at any time should you feel uncomfortable to proceed Information obtained

from this study will be used for no any other purpose other than the

dissertation It will be kept confidential only accessible to the researcher and

pseudonyms will be used to ensure anonymity and confidentiality of

participants and location The researcher will strive to treat all participants

with dignity respect equality and minimise possible harm that might arise

from the study

Agreeing to take part in this study will be treated as your consent to be

involved in this research BUT YOU HAVE THE RIGHT TO WITHDRAW

THE CONSENT

86

RISKS AND BENEFITS

There are no risks to the questions that will be asked If at any point you feel

uncomfortable to answer any question please feel free to ignore such to avoid

any harm

There is likely to be no immediate benefits to you as a participant However

the information obtained in this study will go a long way in informing the

younger generation and wider audience about the culture It might also be

used by the government and other development agencies to plan for

interventions relevant to the needs of widows in your community in the future

based on the evidence you have provided in this study

CONTACTS

The researcher can be contacted at +44 0791263163 lip07acbshefacuk

or linabonyahoocom in case of any questions issues

In case of any problems that need university attention my supervisor can be

contacted at kalbrightshefacuk

PLEASE DONrsquoT TAKE PART IN THIS STUDY IF YOU ARE BELOW 18

YEARS OF AGE

Thank you very much for your anticipated cooperation

Researcher‟s signature Participant‟s signature

helliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

87

REFERENCES

Bhagat RSet al (2002) Cultural variations in the cross-border transfer of

organizational knowledge an integrative framework Academy of

Management Review 27(2) 204ndash221

Boyacigiller NA amp Adler NJ (1991) ldquoThe parochial dinosaur organizational

science in a global contextrdquo Academy of Management Review 16(2) 262ndash

290

Bowling A (ed) (2002) Research methods in health Investigating health and

health services Buckingham Open University press

Dabee R and Greenway D (2001)The Mauritian Economy A Reader

PalgraveNew York

Dawson C D (2002) Practical research methods A user friendly guide to

mastering research techniques and projects Oxford How to Books Ltd

Denscombe M (ed) (2007) The good research guide for small scale social

research projects Berkshire Open University Press

Denscombe M(ed) (2003) The good research guide For small scale social

research projects Maidenhead Open University Press

Economic And Social Research Council (2005) ESRC research ethics

framework [online]

httpwwwesrcsocietytodayacukESRCInfoCentreopportunitiesresearch5

Fethics5Fframework [ Accessed May 05 2008]

88

Gilbert N (ed) (2001) Researching social life London Sage Publishers

Grbich C (1999) Qualitative research in health An introduction London

Sage publications

Hunter D amp Lang T (1993) The Leeds declaration Leeds Nuffield Institute

for Health

Neuman L W(ed) (2000) Social research methods qualitative and

quantitative approaches Needham Heights MA Allyn amp Bacon

Maynard M amp Purvis J (1994) Researching womens lives from a feminist

perspective London Taylor and Francis group

Muuka GN (2002) Africas informal sector matters a challenge to scholars

to close the knowledge gap Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

Business and Development International Conference Port Elizabeth April 3-

6 pp1-6

Southwood R (2004)The impact of ICT on SMEs ndash a motor for future

economic growth in hard-pressed times [Online] Balancing Act news update

wwwbalancingact-africacomnewscurrent1html [Accessed 26 January

2008]

Machacha L (2002) Impact of information technology on small and medium

enterprises (SMEs) in Botswana Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

89

Business and Development International Conference Port Elizabeth April 3-

6 pp277-82

Organisation for Economic Co-operation and Development (OECD)

(2000)OECD study highlights role of small and medium enterprises in job

creation Organisation for Economic Co-operation and Development

[Online]wwwoecdorgmediapublishpb00-11ahtm [Accessed 8 July 2008]

Commonwealth Secretariat UK (2006) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius London Commonwealth

Secretariat

Reed DM (1998) Using the Business Excellence Model in Small Service

Business British Quality Foundation

Taylor AW amp Adair RG (1994) ldquoEvolution of Quality awards and self

assessment practices in Europe a case for considering organisation sizerdquo

Total quality Management 5 (4) 227-237

United Nations (1993) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

Johanson J amp Wiedersheim-Paul F (1995) The Internationalization of the

Firm - Four Swedish Cases Journal of Management Studies 20 (3) 123-139

90

Chui ACW Lloyd AE and Kwok CCY (2002) The determination of

capital structure is national culture a missing piece to the puzzlerdquo Journal of

International Business Studies 33(1) 99ndash127

Earley PC amp Gibson CB (2002) Multinational Teams A New Perspective

Lawrence Earlbaum and Associates Mahwah NJ

Gibson CB (1999) ldquoDo they do what they believe they can Group-efficacy

beliefs and group performance across tasks and culturesrdquo Academy of

Management Journal 42(2) 138ndash152

Hofstede G (1980) Cultures Consequences International Differences in

Work-Related Values Sage Newbury Park CA

SMIDO (2006)A new Vision For SMEs Development Mauritius

Government Printer Port Louis

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Stone A (1997) SMEs and Technology why should we make special efforts

to help World Bank

Bhagat RS et al (2003) Knowledge in Cross-Cultural Management in Era

of Globalization Where Do we Go from Here in D Tjosvold and K Leung

91

(eds) Cross-Cultural Management Foundations and Future Ashgate Englan

155ndash176

Cairncross F (2001) The Death of Distance Harvard Business School Press

Boston MA

Commonwealth Secretariat UK (2005) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius Commonwealth Secretariat

Drucker PF (1995) Managing in a Time of Great Change Truman Talley

BooksDutton New York

Guilleacuten M (2001) ldquoIs globalization civilizing destructive or feeble A critique

of five key debates in the social science literaturerdquo Annual Review of

Sociology 27 235ndash260

Gibson CB and Cohen SG (2003) Virtual Teams that Work Creating

Conditions for Virtual Team Effectiveness Jossey-Bass San Francisco

Grazol P et al(2004) ldquoThe Effect of Culture on IT Diffusion Email and Fax in

Japan and the US Information Systems Researchrdquo Journal of International

Consumer Marketing 16 4 pp 29-64

Greider W (1997) One World Ready or Not Crown Business New York

92

Gertler MS (1997) The Invention of Regional Culture In Lee R and Willis J

eds Geographies of Economies London Arnold

Govindarajan V and Gupta AK (2001) The Quest for Global Dominance

Transforming Global Presence into Global Competitive Advantage Jossey-

Bass San Francisco

Haire M et al(1966)Managerial Thinking An International Study Wiley

New York

Heuer M et al(1999) Cultural stability or change among managers in

Indonesia Journal of International Business Studies 30(3) 599ndash610

Hofstede G (1997) Cultures and Organizations Software of the Mind New

York McGraw-Hill

Hofstede GH (2001) Cultures Consequences Comparing Values

Behaviors Institutions and Organizations Across Nations London Sage

Publications

Hoecklin L (1995)Embedded Autonomy States and Industrial

Transformation Princeton NJ Princeton University Press

93

IBP USA (2002) Mauritius Investment and Business Guide IB Tauris and Co

LTD London

Kerr C et al (1960) Industrialism and Industrial Man Harvard University

Press Cambridge MA

Kirkman BL amp Shapiro DL (2000) ldquoUnderstanding why team members

won‟t share an examination of factors related to employee receptivity to team-

based rewardsrdquo Small Group Research 31(2) 175ndash209

Lisenda L (2003) Small and medium-scale enterprises in Botswana their

characteristics sources of finance and problems BIDPA Gaborone

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Meredith GG (ed) (2004) Small Business Management in Australia

McGraw-Hill Sydney

Mistry PS (1999) ldquoCommentary Mauritius ndash quo vadisrdquo African Affairs 98

(393) 551ndash69

Mullins LJ(ed) (1999) Management and Organizational Behavior 5th ed

London Financial Times Pitman

94

Myers MDamp Tan FB (2002) ldquoBeyond Models of National Culture in

Information Systems Researchrdquo Journal of Global Information Management

10 (1) 112-134

Putz R (2000) ldquoCulture and entrepreneurship views from the middle and

lower level managersrdquo Journal of Business Ethics 22 145- 153

Scottish Economic Statistics Scottish ExecutiveONS IDBR (2005)Size

Analysis of Welsh Business SDR 692004Statistical Press Release URN

0440

Straub D et al (2002) rdquoTowards A Theory-Based Measurement of Culture

Journal of Global Information managementrdquo 10 (1)

Schaeffer RK (2003) Understanding Globalization The Social

Consequences of Political Economic and Environmental Change Rowman amp

Littlefield Lanham MD

SMIDOA new Vision For SMEs Development(May 1996)

SMME Task Force Report (1998) Small medium and micro-enterprises task

fore force report Government Printer Ministry of Commerce and Industry

Sondergaard M amp Hofstede G (1994) ldquoA study of Reviews Citations and

Replicationsrdquo Organization Studies 15 (3) 447-456

95

Schein EH (1992) Organizational Culture and Leadership Jossey-Bass

San Francisco

Stone A ( 1997) SMEs and Technology why should we make special efforts

to help (World Bank 1997)

Statistical Press Release (2005) URN 0592 Office for National Statistics

Weisinger JYamp Trauth EM (2002) ldquoSituating Culture in the Global

Information Sectorrdquo Information Technology amp People 15 (4) 306-320

United Nations (2005) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

vi

course To Gobonaone Keaosenya thanks for your moral and emotional

support you gave during my studies To my family Lebo Kay Goitse Kgosi

Monica Jullie Douglas and all other friends not mentioned thanks for your

moral support Thanks to my family for their prayers and support

Thanks too to all my MSc in Information Systems classmates for sharing their

extensive and diverse knowledge skills and experiences during the course I

acknowledge friends and colleagues in Botswana who encouraged me to

pursue this programme particularly Dr Jorosi for the inspirational advice

Special thank to my sincere friend Patience Chakandinakira for her moral

supportTo Dr Phil Lyoka thank you for the editing and grammar corrections

and all the support you gave throughout this project

Due to technical limitations I am not able to list everyone but I OWE ALL OF

YOU who provided moral academic technical economic support or

otherwise a very BIG THANK YOU including whoever reads this work

vii

LIST OF ABBREVIATIONS

BIDPA Botswana Institute for Development Policy and Analysis BOI Board of Investment ESRC Economic And Social Research Council EPZ Export Processing Zones FDI Foreign Direct Investment GDP Gross Domestic Product GSP General System of Preferences IB International Business ICT Information Communication Technologies ILO International Labour Organisation IT Information Technology ISO International Organization for Standardization IVTB Industrial and Vocational Training Board MEDIA Mauritius Enterprise Development Investment Authority MNC Multinational Companies NAFTA North American Free Trade Agreement NHPA National Handicraft Promotion Agency OECD Organisation for Economic Co-operation and Development SADC Southern African Development Community SEHDA Small Enterprises amp Handicraft Development Authority SME Small and Medium Enterprise SMME Small medium and micro-enterprises SMIDO Small amp Medium industries Development Organisation UK United Kingdom UN United Nations USA United States of America WTO World Trade Organization

viii

LIST OF ILLUSTRATIONS TABLES Table 1 THE STUDY TIME SCALE

2 RESPONDENTS RATE ACCORDING TO SECTORS

3 AGE GROUP AS PER PARTICPANT

4 GENDER PROFILE

5 EDUCATION PROFILE 6 YEARS EMPLOYED AS CEO 7 COMPANY AGE PROFILE 8 NUMBER OF EMPLOYEES 9 ANNUAL SALES 10 OWNERSHIP

FIGURES 1 MAP OF MAURITIUS SHOWING ALL PROVINCES

2 MAURITIUS MAP SHOWING POLITCAL DIVISIONS

3 THE DYNAMIC OF TOP-DOWN-BOTTOM-UP PROCESS ACROSS LEVELS OF CULTURE

4 PUTZ MODEL FOR IMMIGRANT BUSINESS AND CULTURE

5 THE BASIC MECHANISM OF INTERNATIONALISATION-STATE AND CHANGE ASPECT

ix

ABSTRACT

In this new millennium few executives can afford to turn a blind eye to global

business opportunities The globalizing wind has broadened the mindsets of

executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories One such new

trajectory is the concern with national culture Whereas traditional IB research

has been concerned with economic legal issues and organizational forms and

structures the importance of national culture has become increasingly

important in the last two decades largely as a result of the classic work of

Hofstede (1980) National culture has been shown to impact on major

business activities from capital structure (Chui et al 2002) to group

performance (Gibson 1999)

The purpose of this study was to understand the concept on how to penetrate

a new international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

Data was collected through telephone interview web survey literature review

and face to face interview involving business managers legal stakeholders

and government officials and former government ministers About 17

telephone interviews were done with only government officials 4 face to face

interviews and 140 web survey interviews questions All the respondents were

x

randomly selected and respondents would suggest further participants Data

was put in to categories and themes and analysed according to those themes

Putz (2000) model was used as guide to selection of themes

Findings revealed the following 1 Language and religion are not a barrier to

foreign investment in Mauritius 2 Mauritius is a peaceful and tolerant nation

and most of its social life revolves around family and friends 3 Market

opportunities exits in the manufacturing industry offshore financial services

cyber culture and the construction industry 4 The country‟s business

economy faces stiff competition from Botswana South Africa and Vietnam 5

The government plays an important role in ensuring security for foreign

investors

From the results it was concluded that culture plays an important role in the

daily lives of the Mauritian people but it does not have a direct impact to

investment in Mauritius

1

CHAPTER ONE

INTRODUCTION

Globally Small and Medium Enterprises (SMEs) are increasingly regarded as

vital for diversifying economies through the creation of employment

(Machacha 2002 p 277) The OECD (2000) notes that small and medium-

sized enterprises account for 60-70 percent of jobs created in member

countries Southwood (2004) in discussing the status of the SME sector in

Africa observed that governments and large corporations dominated

economies of the countries yet the real engine of economic growth lay with

SMEs Muuka (2002 p 1) in discussing the SME sector in Africa noted that

the informal sector is huge due to the large numbers of employees it absorbed

as a consequence of inadequate jobs and opportunities in the formal sector

The author points out that in many African countries the informal sector is

estimated to employ from three to six times the number of employees in the

formal sector However very little has been documented through research

about this important sector

In Mauritius the Mauritian government believes that the real engine of

sustainable and equitable growth is in the SME sectors Not only is it of great

importance for the rate of job creation and income generation but also it

deserves particular attention since the sector has been largely neglected in

the past In this respect this study of Mauritius is important in addressing

some of issues of culture by using the International business as a framework

for this study to understand the business environment in Mauritius and the

potential for growth in a global perspective (Stone 1997)

2

In this new millennium few executives can afford to turn a blind eye to global

business opportunities Japanese auto-executives monitor carefully what their

European and Korean competitors are up to in getting a bigger slice of the

Chinese auto-market Executives of Hollywood movie studios need to weigh

the appeal of an expensive movie in Europe and Asia as much as in the US

before a firm commitment The globalizing wind has broadened the mindsets

of executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories

However research shows that as markets competition and organisations

globalise the business people businesses themselves and consumers

involved in these institutions increasingly have to interact manage negotiate

and compromise with people from different cultures (Hofstede 1997

Hoecklin 1995) Global business managers report that when doing business

overseas challenges mount For example structural conditions physical

social and economic arrangements can affect business operations and

outcomes as can the varied norms and behaviours that come with different

national cultures

One such new trajectory is the concern with national culture Whereas

traditional IB research has been concerned with economiclegal issues and

organizational forms and structures the importance of national culture

broadly defined as values beliefs norms and behavioral patterns of a

national group (Hofstede1980) has become increasingly important in the last

two decades largely as a result of the classic work of Hofstede (1980)

3

National culture has been shown to impact on major business activities from

capital structure (Chui et al 2002) to group performance (Gibson 1999) For

reviews see Boyacigiller and Adler (1991) and Earley and Gibson (2002)

Weisinger and Trauth (2003) report that culture evolves and takes unique

forms in local offices of organizations This means that culture is both dynamic

and situated in its local context Thus external conditions both structural and

cultural can influence global business Yet small and medium enterprise

(SMEs) managers can have an impact on how their organizations‟ cultures

evolve Therefore strategic leaders need to introduce unique norms values

and processes that fit together coherently in successful organizations

Therefore the main purpose of this case study is to explore and understand

the Small Medium Enterprise (SMEs) business environment in Mauritius and

how SMEs can penetrate the business culture there

The purpose of this paper is therefore to explore and understand how national

culture influences international business decisions and how to culture affects

international business investment using Mauritius as a case study

In this chapter the author outlines the background of the study specifies the

study objectives describes the significance of the study gives methodological

overview and finishes off by outlining definitions of key terminologies

4

11 Background to the Study

Strategically located in the Indian Ocean at the crossroads of Africa and Asia

Mauritius is reputed for its beautiful countryside and its 150 kilometres of white

sandy beaches and transparent lagoon A British colony that gained

independence in 1968 officially known as Republic of Mauritius the country is

positioned to the east of the Madagascar Islands The geographical

coordinates of the nation are 20ordm17 South latitude and 57ordm33 East longitude

The total area covered by the island nation is 2040 square kilometres

Mauritius enjoys a maritime sub-tropical climate and is therefore an all-year-

round holiday destination From a monocrop economy depending mainly on

sugar it has diversified its economic activities into textile and apparel

industry tourism and financial service Mauritius has witnessed a massive

development in the last decades (SMIDO 2006)

5

Figure 1 Map of Mauritius showing all Provinces

Source Encarta World atlas online

6

Figure 2 Mauritius map showing political divisions of the country

Source Maps of the world online

The research area was around the capital city Port Louis marked in red For

anonymity the site was just called A or B Administratively Mauritius is divided

into nine Provinces (figure 2)

The country is remarkable in its ethnic diversity It forms a unique mosaic of

immigrants from the Indian sub-continent Africa Europe and China The

cultural diversity and harmony of the island make Mauritius a unique place in

the world The various religions found on Mauritius tend to play a major part in

7

the islands cultural events and churches temples and mosques are to be

found everywhere Hindus make up approximately half of religiously affiliated

Mauritians followed by Muslims and Christianity as the minority It is also

known for its social peace political stability and racial harmony Its steady

economic growth over the years coupled with its nation‟s social cohesion and

prosperity ensure continuing development (Country Profile 2005)

The country is equipped with a highly skilled labour force to suit virtually all

business in two international languages English and French and a very good

infrastructure thereby attracting Foreign Direct Investment The average

economic growth was 56 over the last 3 years The income per Capita has

reached 4000 US Dollars As a result the standard of living has gone up The

country has now a life expectancy rate of 714yrs an adult literacy rate of 83

(Country Profile 2005)

To face globalisation and a new economic environment the Government has

taken several steps High value-added capital intensive and knowledge-

based activities are on the priority list The Information Technology sector is

undergoing rapid changes so as to be fit for the next millennium The aim is to

make Mauritius a centre for high-tech and software services which can be

exported (Commonwealth Secretariat 2006)

8

12 An Overview of Mauritian Economy

The economy of Mauritius has experienced major structural transformation

over the last two decades The country has moved away from a mono-crop

economy with fast population growth high unemployment and low per capita

income to one that is more dynamic and diversified The sources of

diversification have been agriculture export manufacturing (mainly textile)

tourism and more recently international services with Offshore and Freeport

activities (Country profile 2005)

To respond to the global competition in these sectors Mauritius has made

extensive use of modern technology to improve its productivity and efficiency

The real growth rates have been around 54 over the past four years and

Mauritius is now classified as a middle-income country and is one of the

healthiest economies in the whole African region (Country profile 2005) The

sugar sector provided the start-up capital for the Export Processing Zones

(EPZ) The rapid rate of growth of investment in the manufacturing sector

(investment grew by over 30 each year from 1983 until the late 1990s in this

sector) that led to the success of the EPZ and the Mauritian economy as a

whole This was made possible by the confidence of entrepreneurs and

foreign investors prevailing in the country at that particular time The private

sector accounts for approximately 70 of total capital formation in Mauritius

Investment rate stood around 27 in the four years ending 1996 peaking to

30 in 1994 (SMIDO 1996)

9

When the government recommended the diversification of the economy with

the creation of Export Processing Zones in the early 1980‟s the EPZ sector

benefits from duty-free and quota free access into European Union markets

granted under the Lomeacute Convention as well as tariff preferences granted

under the General System of Preferences (GSP) by countries such as North

America and Japan The mid 1980s witnessed a textile boom raising per

capita incomes and living standards However the conclusion of the Uruguay

Round (General Agreement on Trade amp Tariffs) implies the loss of guaranteed

markets and preferential access which will result in strong competition in

these respective markets (Country profile 2005)

The new strategy of the industrial sector aims at targeting high quality and

high value added products with a view to restoring the competitiveness of the

goods by applying latest technology to the manufacturing industry and hence

improving the quality of the finished products Limited data is available

regarding the SME sector in Mauritius The current research has observed

that there is little research in the field in SME sector in Mauritius

In view of the importance of foreign investment as a source of sustenance to

economic growth the government of Mauritius has taken a series of policy

measures to encourage its flows into manufacturing offshore banking and

financial services information technology communication and tourism As far

as foreign investors are concerned Mauritius offers itself as an attractive

destination because several positive features such as political stability

10

availability of skilled labour and investment-friendly rules and institutions

(Stone 1997)

With such a promising economy there is virtually no evidence on how to

penetrate the business culture in Mauritius and how culture can affect SMEs

and business opportunities therefore this study will explore and understand

the business environment in Mauritius and the challenges of doing business

there as a foreign investor Currently there is very little research done on

SMEs and culture in Mauritius

13 Mauritius SME Background

Experience shows that attitudes towards small business vary from decade to

the next from country to country Before the industrial revolution all business

was small business but with industrial and commercial expansion of

developed nations small has become medium and medium has become big

business

Business owners and managers have often seen growth as an end in itself

and at time the cry get big or get out has been heard in most nations

(Meredith 2004) For more than two decades SMEs have experienced

favourable growth SME has long been prominent in the countrys economy

and make up a large portion of national economy in terms of output

employment and effective utilisation of regional resources Small and medium

enterprises in Europe make up 998 of all European enterprises provide

66 of its jobs and account for 65 of its business turnover (Meredith 2004)

11

In developing countries SMEs account more than 90 of all enterprises

Over the last five years they have been responsible for more than 80 of job

created (Stone 1997) On the issue of job creation Stone (1997) found that

SMEs create more employment than large enterprises and with a lower

investment per job created SMEs are not usually associated with international

activity but they do in fact play a significant international role and their

importance appears to be increasing Available data on SMEs international

activity are very limited (Stone 1997)

In general terms and depending on the country SMEs contribute between

15 and 50 of exports and between 20 and 80 of SMEs are active

exporters Overall it is estimated that SMEs now contribute between 25 and

35 of world-manufactured exports (UN 2005) Increased exports not only

boost the level of sales and employment but also extend the life cycle of

goods and services

In Mauritius SMEs represent 19 according to a report issued by the

Commonwealth Secretariat entitled a Study of Small Firm export Policies

and Institutions in Mauritius Subsequently these SMEs have developed

gradually and move from their tradition orientated operations to export-led

firms probably due to improvement of technology in the field of communication

and the new economic dimension which prevailed

At this juncture it is important to report that few studies on culture and small

and medium entrepreneurship have been conducted on Sub-Saharan Africa

12

There is a paucity of information and even those scarce studies they do not

cover broad perspectives of the situation of SMEs in Sub-Saharan Africa

Therefore this study builds upon the existing limited body of research

regarding how business cultures contribute to the success or failure of small

and medium entrepreneurs In particular it explores the business culture in

Mauritius and its barriers to penetration for new and foreign small and

medium entrepreneurs

14 Purpose Statement

The purpose of this study was to understand the concept on how to penetrate

an international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

15 Aims and Objectives

To investigate the challenges of national cultural differences in

business in Mauritius

To investigate how to penetrate the business environment for a new

and or foreign business culture especially in Mauritius

To investigate business opportunities for SMEs in Mauritius and how

these can benefit the locals

13

16 Research Question

How can Small and Medium Enterprises penetrate the business culture in

Mauritius

These sub-questions all pertain to SMEs business

o 161 SUB-QUESTIONS

What kind of businesses are operating in Mauritius now

What are their business strategies (marketing brands) etc

What are the necessary mechanisms for establishing business in

Mauritius

What are the business needs of established and starting businesses

What are the mechanisms for potential growth of local business

What are the challenges for doing business in Mauritius

How much of business behaviour is influenced by the national culture

17 The Significance of the Study

The findings of the current study will increase the understanding of cultural

barriers to market penetration for SMEs in Mauritius The study adds

knowledge to the body of literature in this area focusing at further

improvement of understudying of culture and business issues The

study becomes part of the universitys education development in line with its

obligations to the communities and the country This research problem arose

from an information need of a particular client This research therefore will try

to explore the client‟s information need and probably contribute to the wealth

of knowledge

14

18 Definitions

CULTURE Hofstede (1997) defines culture as ldquothe collective programming of

the mind which distinguishes the members of one group or category of people

from anotherrdquo It is the norms beliefs and values common to a society

Culture is about the way people understand their world and make sense of it

It only when this is taken for granted assumptions are challenged that people

realise that they even exist (Hofstede 1997)

ENTERPRISE An enterprise is considered to be any entity engaged in an

economic activity irrespective of its legal form This includes in particular

self-employed persons and family businesses engaged in craft or other

activities and partnerships or associations regularly engaged in an economic

activity (European Commission 2003)

INTERNATIONAL BUSINESS International business consists of transactions

that are devised and carried out across national borders to satisfy the

objectives of individuals and organizations The Primary Types of International

Business Activities Are Importing and Exporting Direct Foreign Investment

(Govindarajan and Gupta 2001)

GLOBALISATION refers to a bdquogrowing economic interdependence among

countries as reflected in the increased cross-boarder flow of three types of

entities goods and services capital and knowhow‟ (Govindarajan and Gupta

2001 4)

15

SMALL AND MEDIUM INTERPRISES (SME) is made up of enterprises

which employ fewer than 250 persons and which have an annual turnover not

exceeding EUR 50 million andor an annual balance sheet total not

exceeding EUR 43 million (European Commission 2003)

In Mauritius an SME has been redefined taking into account the volume of

investment in equipment which was previously one million up to 10 millions

Mauritian Rupees presently to be classified as a small enterprises and with

less than 50 and 200 employees for small and medium scale respectively

(Stone 1997)

16

CHAPTER TWO

LITERATURE REVIEW

The aim of this chapter is to introduce conceptual themes that are important in

order to understand the role of culture in international business The chapter

discusses the context of relationship between culture and international

business practices in small and medium enterprises (SMEs) and the major

challenges they face in the area of globalisation A model adopted from Putz

(2000) forms a framework for articulating the conceptual role that culture has

in international business using Mauritius as a case study

21 Embracing Cultural change in an era of globalization

A significant theoretical issue for international business is the role of culture in

the whole aspect of information transformation Since the landmark study by

Haire et al (1966) and the publication of Industrialism and Industrial Man by

Kerr et al (1960) researchers have continued to search for similarities in

culturally specific beliefs and attitudes in various aspects of work related

attitudes as well as consumption patterns and other behaviours If cultures of

the various communities of the world are indeed converging (Heuer et al

1999) International Business (IB) related practices would likely become

increasingly similar For example standard culture-free business practices

would emerge and inefficiencies and complexities associated with divergent

beliefs and practices in the past era may disappear (Heuer et al 1999)

17

Studies elsewhere suggest that culture gets affected by globalization practices

in the current 21st century Globalization has seen flows of information

technology money and people and is conducted via international

government organizations such as the African Union the North American

Free Trade Agreement (NAFTA) and the European Community global

organizations such as the International Organization for Standardization

(ISO) multinational companies (MNCs) Also includes cross-boarder alliances

in the form of joint ventures international mergers and acquisitions These

interrelationships have enhanced participation in the world economy and

have become a key to domestic economic growth and prosperity (Drucker

1995 153)

Literature suggests that because globalization tends to redistribute economic

rewards in a non-uniform pattern a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) Strong opposition to

globalization usually originates from developing countries that have been

affected by the destabilizing effects of globalisation However in recent years

there have been heated debates in Western economies triggered by

significant loss of professional jobs as a result of offshoring to low wage

countries (Schaeffer 2003)

Workers in manufacturing and farming in advanced economies are becoming

increasingly wary of globalization as their income continues to decline

18

significantly In parallel to the angry protests against globalization the flow of

goods services and investments across national boarders has continued to

fall after the rapid gains of the 1990s The creation of regional trade blocs

such as NAFTA the European Union and the Association of Southeast Asian

Nations have stimulated discussions about creating other trade zones

involving countries in South Asia Africa and other parts of the world

Although it is often assumed that countries belonging to the World Trade

Organization (WTO) have embraced globalization the fact is that the world is

only partially globalized at best (Schaeffer 2003)

Many parts of Central Asia and Eastern Europe including the former

republics of the Soviet Union parts of Latin America Africa and parts of

South Asia have raised heightened scepticism about globalization (Greider

1997) In fact less than 10 of the world‟s population are fully globalized (ie

being active participants in the consumption of global products and services)

(Schaeffer 2003)

According to Guile`n (2001) these trends might indicate that globalization is

being impeded by tendencies towards country-specific modes of economic

development making the convergence of IB-related values and practices

difficult to achieve Hofstede (1980)‟s favourite definition of f ldquoculturerdquo is

precisely that its essence is ldquocollective mental programmingrdquo it is that part of

peoples conditioning that they share with other members of their nation

region or group but not with members of other nations regions or groups

Hofstede (2001) asserts that these mental programs of people around the

19

world do not change rapidly but remain rather consistent over time His

findings tend to suggest that cultural shifts are relative as opposed to

absolute Although clusters of some countries in given geographical locales

(eg Argentina Brazil Chile) might indicate significant culture shifts towards

embracing Anglo values the changes do not diminish the absolute differences

between such countries and those of the Anglo countries (ie US Canada

UK)

According to Hofstede (1980) Examples of differences in mental

programming between members of different nations can be observed all

around us One source of difference is of course language and all that

comes with it but there is much more In Europe British people will form a

neat queue whenever they have to wait not so the French Dutch people will

as a rule greet strangers when they enter a small closed space like a railway

compartment doctor‟s waiting room or lift not so the Belgians Austrians will

wait at a red pedestrian traffic light even when there is no traffic not so with

the Dutch Swiss tend to become very angry when somebody-say a foreigner

makes a mistake in traffic not so with the Swedes All these are part of an

invisible set of mental programs which belongs to these countries‟ national

cultures Such cultural programs are difficult to change unless detaches the

individual from his or her culture Within a nation or a part of it culture

changes only slowly (Hofstede 1980)

20

This is the more so because what is in the minds of the people has also

become crystallized in the institutions namely government legal systems

educational systems industrial relations systems family structures religious

organizations sports clubs settlement patterns literature architecture and

even in scientific theories All these reflect traditions and common ways of

thinking which are rooted in the common culture but may be different for other

cultures (Hofstede 1980)

22 The dynamics of Culture as a Multi-level Multi- layer construct

Multi-level approaches of viewing culture as a multi-level construct that

consists of various levels nested within each other from the most macro level

of a global culture through national cultures organisational cultures group

cultures and cultural values represented the self aspect of the individual See

figure 3

21

Figure 3 The dynamic of top-down-bottom up process across levels of

culture (Source Schein 1992)

The model proposes that culture as multi-layer construct exist at all levels

from global to the individual Changes that take place at the external layer of

behaviour are most likely shared by individuals who belong to the same

cultural background level hence characterising the aggregated unit (Schein

1992)

Top-

Down

Individual

Behaviour

Values

Assumptions

Global Culture

National Culture

Organizational Culture

Group Culture

Bottom

Up

22

Below the global level are nested organizational layers or networks at the

national level with their local cultures varying from one nation or network to

another Further down are local organizations and although all of them share

some common values of their national culture they vary in their local

organizational cultures which are also shaped by the type of industry that

they represent the type of ownership the values of the founders etc Within

each organization are sub-units and groups that share common national and

organizational cultures but differ from each other in their unit culture based on

differences in functions of their leaders‟ values and the professional and

educational level of their members At the bottom of this structure are

individuals who through the process of socialization acquire the cultural values

transmitted to them from higher levels of culture Individuals who belong to the

same group share the same values that differentiate them from other groups

and create a group-level culture through a bottom-up process of aggregation

of shared values (Schein 1992)

Both top-down and bottom-up processes reflect the dynamic nature of culture

and explain how culture at different levels is being shaped and reshaped by

changes that occur at other levels either above it through top-down

processes or below it through bottom-up processes(Schein 1992) Similarly

changes at each level affect lower levels through a top-down process and

upper levels through a bottom-up process of aggregation The changes in

national cultures observed by Inglehart and Baker (2000) could serve as an

23

example for top-down effects of economic growth enhanced by globalization

on a cultural shift from traditional values to modernization

In view of the complexity of the organizational structures specific

organizational structures that have global character need to be established so

as to adopt common rules and procedures in order to have a common

bdquolanguage‟ for communicating across cultural borders (Kostova 1999 Kostova

and Roth 2003 Gupta and Govindarajan 2000)

Given the dominance of Western Multi National Companies (MNCs) the

values that dominate the global context are often based on a free market

economy democracy acceptance and tolerance of diversity respect of

freedom of choice individual rights and openness to change (Gupta and

Govindarajan 2000) The multi-level structure explains how a lower-level

culture is being transformed by top-down effects and that the cultural layer

that changes first is the most external layer of behaviour In the long run

bottom-up processes of shared behaviours and norms would affect the local

organizational culture as well (Schein 1992)

23 International Business and Culture

Knowledge of cultural differences is one of the key components in

international business practices and success Improving levels of cultural

awareness can help companies build international competencies and enable

individuals to become more globally sensitive (Hofstede 2003) Indeed

cultural differences contribute towards different ways people behave in

24

business Research in the field of international management underscores that

the attributes of cultural knowledge used by a firm play an important role in the

firms expansion For example Martin and Salomon (2003) found that cultural

orientation in entrepreneurial action is a central theme and can serve as a

starting point for immigrant business

ldquoUnderstanding the culture and the conceptualisation of culture in conjunction with entrepreneurial action is a critical issue when doing business in an international environment Contributions of economic geography inspired by the cultural turn which shows alternative ways of thinking about the connection between culture and economy by using a new understanding of culture are also critical (pg 198)rdquo

The statement underscores the important of understanding the culture of a

society before attempting to do business there otherwise the company runs a

risk of going out of business The ways in which different groups of people

interpret their environment and organise their activities is based the on the

specific cultural values and assumptions Certain values often thought to be

universal really do differ from culture to culture What constitutes an ethical

business practice is not the same everywhere This can be an enormously

difficult area in managing business across cultures (Straub et al 2002)

Although one may claim cultural differences to be going away they are

actually being absorbed in the business practices This makes it more critical

than ever to try to understand different cultures and their influence on the

ways people do business and view the world The costs of not understanding

are getting greater than ever The essence of culture is not what is visible on

the surface It is the shared views about what people understand and interpret

25

the world These cultural differences are crucial influences on interactions

between people working and managing across culture (Gertler 1997)

The social behaviour of a society is embedded in a particular context and is

connected to other deeply held values and beliefs (Weisinger and Trauth

2003) This means that the stakes are high for mismanaging cultural

differences Ignoring or mishandling differences can result in an inability to

retain and motivate employees a misreading of the potential of cross-border

alliances marketing and advertising blunders and failure to build sustainable

sources for competitive advantage Mismanaging cultural differences can

render otherwise successful managers and organisations ineffective and

frustrated when working across cultures (Weisinger and Trauth 2003)

24 Putz Model For Immigrant Business and Culture

Literature in the field of Immigrant Business differentiates mainly between two

basic approaches each with a different emphasis which are combined to

explain entrepreneurial action of immigrants (Putz 2000) The first approach

emphasis the bdquoopportunities‟ offered by the host country including access to

the market and job market conditions The second approach focuses on the

bdquoresources‟ of migrant groups from whom the concept of culture becomes

essential (see Figure 1 below)The Putz (2000) cultural model below is a

summary of explanatory approaches following the assumption that self

employment of certain groups is the result of their specific cultural

predisposition which favours business activity

According to Putz‟s (2000) view of cultural model the bdquoopportunities‟

approach which refers to market possibilities as an explanation for self

26

employment of immigrants assume that there are certain market segments

with favourable development perspectives especially for immigrant groups

Here two factors receive special attention which are niche markets and legal

and institutional frameworks Niche markets make the establishing of business

by immigrants easier because their needs for consumer goods create specific

demand Legal and institutional frameworks gain awareness in international

comparative studies through restrictions specified by a country regarding

business permits and regulations these frameworks influence both the extend

and the sectored structure of the bdquoimmigrant business‟ (Putz 2000)

According to Putz (2000) the observation that most immigrant groups show a

higher level of self employment rate than others often forms the background

explanation which focus on opportunities created by the host society

Resource models stress the shared characteristics of migrants of same origin

Resources models explain that certain groups have specific cultural

resources which make it easier for members of that group to become self

employed therefore one can distinguish between the cultural traditions and

socialethnic networks ( Putz 2000)

27

Figure 4 Dominating models concept of bdquoImmigrant Business‟ (Source Putz

2000)

OPPORTUNITIES

Market Access

Possibilities

Market Conditions

Niche Markets

lsquoOpenrsquo Markets

Job Market

Conditions

Access

Vertical Mobility

Legal and Institutional

Frameworks

lsquoEthnicrsquo

Business

RESOURCES

lsquoClass Resourcesrsquo lsquoCultural Resourcesrsquo

Cultural

Traditions

Social lsquoEthnicrsquo

Resources

28

When successfully managed differences in culture can lead to innovative

business practices faster and better learning within the organisation and

sustainable sources of competitive advantage (Sondergaard and Hofstede‟s

1994) In relation to that the current study argues that managers need to

study and understand the culture and the niche market before investing This

assumption has been raised as a result of the previously reported experiences

and research findings already reported so far It is therefore critically important

to understand that every society has got its own way of behaving which needs

to be understood if the business is to succeed Operating companies need to

understand what their business means to the people of the given community

and their culture

Several studies of international business have indicated that

internationalization of the firms is a process in which the firms gradually

increase their international involvement(Johanson amp Wiedersheiml 1995

Gibson 1999 Chui et al 2002 ) It seems reasonable to assume that

within the frame of economic and business factors the characteristics of this

process influence the pattern and pace of internationalization of firms Figure

5 below shows a model of the internationalization process of the firm that

focuses on the development of the individual firm and particularly on its

gradual acquisition integration and use of knowledge about foreign markets

and operations and on its successively increasing commitment to foreign

markets The basic assumptions of the model are that lack of such knowledge

is an important obstacle to the development of international operations and

that the necessary knowledge can be acquired mainly through operations

abroad (Johanson and Wiedersheiml1995)

29

FIGURE 5 The Basic Mechanism of Internalisation- State and Change Aspects

Figure 5 Basic Mechanism of Internalisation (Source Johanson amp

Wiedersheiml 1995)

Market knowledge and market commitment are assumed to affect both

commitment decisions and the way current activities are performed These in

turn change knowledge and commitment ( Aharoni 1966) In the model it is

assumed that the firm strives to increase its long-term profit which is

assumed to be equivalent to growth (Williamson 1966) The firm is also

striving to keep risk-taking at a low level These strivings are assumed to

characterize decision-making on all levels of the firm Given these premises

and the state of the economic and business factors which constitute the frame

in which a decision is taken the model assumes that the state of

internationalization affects perceived opportunities and risks which in turn

influence commitment decisions and current activities (Johanson amp

Wiedersheiml 1995)

Market

Knowledge

Market

Commitment

Commitment

Decisions

Current

Activities

30

2 5 The Role Of Information Communication Technologies

Hofstede (2001) observed that not only will cultural diversity among countries

persist but also new technologies might even intensify the cultural differences

between and within countries Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

Information communication technologies (ICTs) enable users to access varied

amounts of information globally however it does not necessarily increase

their capacity to absorb the information at the same rate as the information is

disseminated or diffused (Bhagat et al 2002) In addition information and

knowledge are interpreted through cultural lenses and the transfer or diffusion

of organizational knowledge is not easy to accomplish across cultural

boundaries (Bhagat et al 2002)

Ethnic groups around the world observe the lifestyles and cultural values of

other countries and some are interested in adopting part of the lifestyle and

values but others reject it completely (Kirkman and Shapiro 2000) The

effects of new technologies on improving efficiencies of multinational and

global corporations are well known but it is not known how these new

technologies especially computer-mediated communication and the Internet

31

might create significant shifts in the cultural patterns of different ethnic groups

(Kirkman and Shapiro 2000) or on their ways of doing business

In essence there in need to explore how the spread of ICTs is affecting the

progress of globalization in different parts of the world by incorporating the

role of cultural syndromes organizational cultures and other processes

which has recently been attempted by scholars such as Bhagat et al (2003)

and Gibson and Cohen (2003)

Information and Communications Technology (ICT) has become a catchword

with different interpretations and viewpoints even among experts As the

name suggests ICT encompasses all the technology that facilitates the

processing transfer and exchange of information and communication

services In principle ICTs have always been available since the advent of the

printing press The only difference is that from the late twentieth century rapid

advances in technology changed the traditional ways in which information was

processed communications conducted and services available (Adu 2002)

These technological advances have changed business operations and the

way people communicate They have introduced new efficiencies in old

services as well as numerous new ones One could even imagine going as far

as replacing the term Post-industrial Society with ldquoInformation Society that

is a society where the ability to access search use create and exchange

information is the key for individual and collective well-being (Kaplan 2001)

32

Globally entrepreneurship is considered as the engine of economic

development The SME sector has the potential to address socio-economic

challenges facing both developing and developed countries Without small

business development it is argued that economies stagnate unemployment

levels continue to rise and the general standard of living deteriorates

Information and communications technology (ICT) has been identified as a

major area of need to develop the SME sector in areas of information

provision access to national and international markets and other areas of

business development and support ( Ferrand and Havers 1999)

ICTs enable entrepreneurs to manage their businesses efficiently and thus

enhancing their competitiveness in the global market They can increase their

geographic reach improve efficiency in procurement and production and

improve customer communications and management For these reasons the

need to encourage and accelerate the uptake and optimal application of ICTs

by SMEs in different sectors of the economy cannot be overemphasized

(Ramsay et al 2003) The ICT sector has the potential to absorb prospective

entrepreneurs considering various business opportunities offered by the

sector Some of the business opportunities available within the sector relate to

systems integration application development database administration web

design and internet service provision The sector is also seen as an area with

major opportunities for the historically disadvantaged sectors of the

population It therefore becomes imperative for government to provide

mechanisms to accelerate the entry of SMMEs into the ICT sector (ILO 2001)

33

26 Cross Culture and International Business

Cross-cultural management advice rests on several assumptions in the

tradition of Hofstede (1997) that a) that national culture is comprised of norms

and values that can be readily identified and addressed b) that these norms

values and patterns of behaviour are stable and change at an extremely slow

pace and c) that national culture predominates over organizational culture

epistemic culture gender or other determinants of attitudes and behaviour

According to Hosftede (1997) national culture is comprised of norms and

values that can be readily identified and addressed

Organisational culture (common values and attitudes) affects organizational

success and innovation develops over time and may be difficult to change

ldquoThere is a relationship between an organization‟s culture and its

performance The pervasive nature of organizational culture means that if

change is to be brought about successfully this is likely to involve changes to

culturerdquo (Mullins 1999)

An alternative view sees culture as more complex context-specific and

dynamic For example Weisinger and Trauth (2003) examined the interaction

of national cultures the IT industry culture and a particular firm‟s

organizational culture They observed that the resulting situated culture ldquois

fluid contextually dependent and created by actors within a group who may

hold conflicting assumptions and world viewsrdquo In other words culture is as

what it is because of what it does This means that management must ensure

34

that key capabilities for example marketing analytics or process controls are

developed and nurtured across the organization

Successful global managers recognize that they cannot respond to every

unique opportunity that local settings offer Thus there is an inherent tension

in cultural sensitivity a management team which is ldquotoo sensitiverdquo to cultural

and structural features exposes the organization to the risks that come with a

lack of focus and coherence while managers who do not take cultural and

structural features into account expose the organization to the risks that come

with organizational rigidity (Myres and Tan 2002)

According to Mistry (1999) entrepreneurial networks and clusters in sub-

Saharan Africa have not generally produced the kind of strong transnational

links that characterize Asia‟s flourishing pattern of industrial diffusion The

author states that the reasons for this are complex differences in geography

different models provided by leading countries in the neighbourhood and

policies adopted by governments in the respective regions Chinese business

networks are responsible for some of the information ideas and capital that

helped launch the small Indian Ocean nation of Mauritius as an important

centre for export-oriented industry The Chinese networks in Mauritius also

continue to facilitate a role that Mauritius first began to play in the eighteenth

century they serve as a gateway for overseas Chinese entrepreneurs

interested in investing both in Mauritius and elsewhere in Africa (Mistry 1999)

35

27 Investing in Mauritius

There are a lot of advantages in investing in Mauritius The economy of the

country is stable and the graph of the economy and business is one the rise

for a considerable period of time The Mauritius government has undertaken a

sequence of strategic measures to support its course into offshore banking

manufacturing and financial services communication technology and tourism

keeping in mind the significance of foreign investment as a basis of

nourishment of the financial development (Dabee and Greenaway 2001)

According to Dabee and Greenaway (2001) tthere are various factors that

influence financiers to invest in Mauritius like accessibility of skilled labor

political constancy and venture-friendly institutions and regulations One of

the major factors for the development of Mauritius is the Foreign Direct

Investment (FDI) The government of Mauritius has given all the necessary

support to create the most favorable investment setting by the following steps

Building modern infrastructure

Endorsing suitable legislations

Commencing packages of investment inducements

Investing in human capital

Some of the advantages of investing in Mauritius are as follows

High-quality infrastructure with superb transportation

Democracy and a steady government

Free market financial system fastened on export slanting activities

Excellent system of sea and air transport

36

High standard of living good international schools

A highly educated bilingual and responsive work force

Knowledgeable financial segment providing outstanding services

Constructive market contact and good inducements ( IBP 2002)

Mauritius has various sectors where investment can be made like Information

and Communication Technology and manufacturing For doing business in

Mauritius registered trademark is required The trade marks for business are

issued by the registered Patents and Trademarks sector of Ministry of Foreign

Affairs International Trade and Cooperation In the country of Mauritius a

foreigner is eligible to hold 100 shares In this case one of the directors of

the company has to inhabit in Mauritius and the foreign individual has to

obtain a sanction from the Office of Prime Minister (IBP 2002)

In Mauritius the laws concerning income tax is based on the English law of

income tax The companies in Mauritius are lawfully accountable to pay out

income tax on their profits at an even rate of 25 A company which is

included in the country or has its scheming benefit in the country is measured

for tax reasons to be an occupant corporation To the Mauritius companies

various types of tax incentives are granted The companies that hold

certificate for Tax inducement are responsible to tax at an abridged rate of

15 while the scheduled companies are accountable to pay tax at the rate of

25 ( Dabee and Grrenaway 2001)

37

CHAPTER THREE

METHODOLOGY

Having looked at culture to some depth this chapter explains the methods

used in carrying out the study The study used mixed method approach to

allow for data corroboration and dynamism since the subject in question

needed dynamism and sensitivity in approach

This research mixed both qualitative and quantitative approaches to try and

get best possible research by combining both features because they

complement each other Quantitative data techniques condense data in order

to get a bigger picture whereas qualitative techniques are data enhancers

making it possible to see issues more clearly (Dawson 2002 Neuman 2000)

Attempt was made to keep in line with recommendation made in the Leeds

Declaration proposition number 6 which calls for the application of multiple

methods and perspectives to try and understand social and cultural issues

(Hunter and Lang 1993) Mixing qualitative and quantitative methods also

called positivist and interpretive respectively (Gilbert 2001 and Bowling 2002)

is effective in a complex issue study such as this one because they highlight

different perspectives of the same problem in this case - the public in parallel

with the individual level(Gilbert 2001) This is because quantitative methods

adopt a numerical approach to data collection and analysis to provide macro

level perspective whereas qualitative methods provide micro level perspective

through collecting data from individuals (Ibid)

38

There was also use of impersonal (public) documentation using official

records which were more library based research (Grbich 1999) on top of

theory generating field based methods (Ibid) Many researchers (Bowling

2002 Neuman 2000 Grbich 1999 Denscombe 2003 and Gilbert 2001)

concur that neither of the methods is superior to the other but just different

each having its strengths and weaknesses (Dawson 2002)

The study sought to explore the attitudes behaviour subjective meanings and

experiences of the participants making qualitative approaches best suited

because they emphasize the importance of context (Neuman 2000) However

to generate objective and factual (Maynard and Purvis 1994) statistical

figures quantitative research was more suitable Hence mixing of methods

(Dawson 2002 Denscombe 2003) to counteract weaknesses in both

approaches to give breadth and width to the study (Maynard and Purvis

1994) The flexibility of qualitative research allowed for re-focusing and

refinement of the tool dependent on participants‟ reactions throughout

(Neuman 2000) to pick up any emerging evidence thus applying the

grounded theory approach (Dawson 2002)

39

31 Research Setting

Mauritius is a volcanic island of lagoons and palm-fringed beaches in the

Indian Ocean Southern Africa east of Madagascar with a population of

about 12 million has a reputation for stability and racial harmony among its

mixed population of Asians Europeans and Africans The island has

maintained one of the developing worlds most successful democracies and

has enjoyed years of constitutional order since independence in1968 Over

the past three and half decades the country has been transformed from one

of the poorest in the world to a middle income country with per capita Gross

Domestic Product US $7000 (World Bank 2006) It has preserved its image

as one of Africas few social and economic success countries that mainly

depends on sugar and clothing export and a centre for upmarket tourism But

Mauritian exports have been hit by strong competition from low-cost textile

producers and the loss of sugar subsidies from Europe Consequently

attention has turned to diversification in line with global trends

To this end SMEs have been identified as important instruments to achieve

economic diversification Today the government vigorously supports SMEs

through a range of strategies eg the creation of a business friendly climate

via import liberalisation tax reforms and the launch of the SME Partnership

fund which gives subsidized loans to aspirant SME owners and makes the

availability of finance and facilitating access in particular for those enterprises

that have viable projects but are short of equity The Small Enterprises amp

Handicraft Development Authority (SEHDA) was created following the merger

of the Small amp Medium industries Development Organisation (SMIDO) and the

National Handicraft Promotion Agency (NHPA) The aim of the merger is to

40

rationalize and optimize the use of resources dedicated to the small business

sector in Mauritius

Various cultures and traditions flourish in peace though Mauritian Creoles

descendants of African slaves who make up a third of the population live in

poverty and complain of discrimination Mauritius was uninhabited when the

Dutch took possession in 1598 Abandoned in 1710 it was taken over by the

French in 1715 and seized by the British in 1810 The culture of the country

reflects its diverse ethnic composition There are many religious festivals

some important ones being (in random order) Divali (the hindu festival of

lights in October) Christmas Cavadee (a penitence festival of the south

Indian tradition of hinduism in January) Eid ul Fitr (celebrating the end of the

period of fasting in Islam As the Islamic calendar does not correspond to the

Gregorian calendar the date of its celebration in the year tends to vary In

2003 it was celebrated in November) With such a strong history diverse

culture and such a promising economy painted above makes Mauritius a rich

setting to investigate culture and small medium business entrepreneurship

32 Methods

As justified already this study applied method mix to exploit the benefits of all

methods used while minimising the effects of their weaknesses The obvious

benefit of method mix is that it involves more data which is likely to improve

the quality of research (Denscombe 2003) and that is what the researcher

sought to achieve In deciding which method to use it was acknowledged that

the chosen methods were not superior in any way but more suited to the study

41

circumstances based on the premise of ldquohorses for courses (Denscombe

2003 page 83)

A Questionnaire used in the online web survey allowed for collection of

data from large numbers of participants economically since the project had

financial and time limitations (Ibid) The other advantage of survey exploited is

generation of quantitative data However weaknesses of the method

(empiricism lack of depth and accuracy of responses) were a challenge The

questionnaire was open ended and was completed by the participant in the

absence of the researcher Any questions arising from the participant not

understanding or misinterpreting the question where not taken care of Focus

groups were used to gain depth into some of the emerging issues from

questionnaires to gain insights into the issues surrounding widow inheritance

and to validate some of the data (Denscombe 2003) Telephone and face to

face interviews were used to gather to gain in-depth information on the

issues

All accessible literature on culture and investment in Mauritius as well as

other parts of Africa was reviewed to get insight into any related work to

identify key issues and current knowledge gap so as to sign post this study for

any audience (Ibid)

42

33 Research Participants and sampling

It was difficult to get exact demographic data for each sector Consequently it

was not possible to use any scientific sampling techniques The study

therefore used non-probability sampling (Neuman 2002 Bowling 2002

Denscombe 2003) targeting urban based population

The sample baseline characteristics were

SME managers from aged 18 years and above and over 65 was the

limit Any religion faith Any socio-economic background and residents

of Port Luis and surrounding areas

To sample for quantitative data purposive and snowballing sampling

techniques were used because it was not possible to apply any statistical

formula in getting the samples since there was no single list of SME managers

and other stakeholders to use with any form of probability sampling

Participants were snowballed from one sector to another until the whole

sectors were covered For the focus groups homogenous and critical case

(Grbich 1999) sampling was used to get particular sub group to provide

details In this case to get government officials and the private sector who

were strong enough to talk about their experiences

A total of 161 participants were reached from all the sectors These included

SME manager government officials and the private sector The researcher

wishes to point out that these numbers were not conclusive The numbers

could be much higher because in case the researcher phoned the participants

they were not available to take the call there was no time to go back to

43

ascertain the details Those who were not willing to take part in the study were

also excluded from the above figures For the focus groups discussions 5

government officials and the private widows were invited and used Skype

technology to do a conference

The times when the participants were contacted met were entirely dependent

on participant availability and other events at the time (Gilbert 2001) It varied

between 800 am and 700 pm in the evening because of the time differences

UK and Mauritius time Care was taken to avoid compromising times such as

late in the evening or culturally sensitive days such as weekends when people

were engaged in funerals and church services in this case

The participants showed weariness towards the study because as they put it

ldquoa lot of people come along claiming to collect data to help but never show up

againrdquo

34 Data collection Instruments

The researcher developed an online quantitative data collection questionnaire

(web survey form) which was posted on the university web server with help of

the department technicians A multiple recipient list was created from the

details in the SEHDA website and was randomly sent to the recipients These

only included the SME managers from the seven sectors About 20 contacts

were selected from each sector which made a total of 140 participants

Telephone interviews were made to about 17 government officials and the

private sector who were later divide n to focus groups and a teleconferencing

44

was organised on Skype Face to face interviews were done with government

officials from the Mauritian High Commission in the UK

Apart from the questionnaire an Olympus VN 2100 PC Digital Voice Recorder

was also used during the focus group discussion with the permission of

participants also on telephone interviews and face to face interviews This

was tested set and correctly positioned by the telephone speaker before the

session began to ensure proper functioning It was fitted with a mini

microphone to improve recording quality The digital voice recorder small in

size (only 68 grams in weight) proved user friendly because it was not

intruding too much into the face of participants as opposed to older recording

devices There was a pair of AAA batteries on standby in case the batteries in

use ran flat during the session

35 Ethical Considerations

This study involved very little of sensitive issues but it strived very much to

adhere to the fundamental principles of Human Research Ethics of Respect

for Persons Beneficence and Justice The researcher ensured autonomy self

determination and protection of vulnerable persons through informed consent

participation confidentiality and thorough explanation of what the research

was all about to those with limited knowledge and education Any risk that

might have resulted from the study was minimised as much as practically

possible and the researcher took full responsibility for the protection of

participants There was no form of discrimination other than on participant

baseline characteristics

45

The study also upheld the six key ethical research principles as stipulated by

ESRC - UK (ESRC 2005) To ensure anonymity pseudonyms were used for

participants The information gathered was safely protected through password

use on the computer system and only the researcher had access to the

information The researcher was responsible for storage and destruction of

any information no longer needed such as audio files after transcription

Research respondents participated in a voluntary way free from any coercion

and free to withdraw at any point should they felt uncomfortable

The first ethical committee whose approval was sought was the University of

Sheffield Ethical committee after which the researcher sought ethical approval

from Mauritian authorities through the relevant ministries It was not straight

forward getting ethical approvals in Mauritian but ultimately the ministry of

SMEs approval was obtained

36 Procedure

After all the necessary approvals were obtained the researcher wrote an

explanatory letter (Grbich 1999) or bdquoparticipant‟s information sheet‟ (appendix

5) which included information on informed consent (Denscombe 2003)

After piloting the tools the researcher started by making calls to make

appointment for interviews As the quantitative data collection went on

recruitment of participants to take part in qualitative aspect was done

simultaneously due to time constraints The researcher used individual

judgement to asses those participants who would be courageous enough to

respond to the questionnaire online and to the interviews The managing

46

director for RCBusiness Support Ltd also provided a number of potential

respondents who were used at the initial stages of the study Each interview

session lasted averagely 50 minutes The researcher went to organise the

teleconferencing for the focus group on Skype which also lasted for average

50 minutes

37 Data Analysis

Since the distinction between quantitative and qualitative research is not

watertight (Denscombe 2003) data analysis embraced both because they

have similarities and differences (Neuman 2000) There was analysis of

words and numbers thus holistic versus specific focus (Denscombe 2003)

The analysis adopted a five stages approach (Denscombe 2007) The first

stage was data preparation followed by data exploration analysis

presentation and finally validation

Though some researchers champion for advanced inferential statistics

(Denscombe 2007) the researcher opted for descriptive statistics for the

quantitative data analysis because they still remain effective ways of data

analysis and presentation (ibid) The research data involved nominal as well

as discrete and continuous data which could effectively be analysed using the

chosen method The data was grouped frequencies were described and

finally any linkages were identified The end product of the analysis process

is presented in the results section in various formats Basic statistical

techniques were used to give the data additional credibility in terms of

interpretations of the findings (Denscombe 2007)

47

For the qualitative data the first thing was to back up the original voice

recorded focus group discussion into a password protected lap top This

ensured not only the security of the data but also a back up in case of data

loss The researcher then listened to the recording several times to familiarise

himself with the data after which transcription took place After that the data

was interpreted and categories themes were identified since thematic

analysis was employed The Putz (2000) model was used as a guide to

finding themes The findings are presented in the results section

38 Planned programme of dissemination

The study findings were disseminated to all relevant stakeholders in print

format including the university as part of the postgraduate degree requirement

in academically fulfilling format Two copies of the report were sent to the

Ministry of SMEs in Mauritius and two copies to the Board of Investment of

Mauritius in the UK as part of the requirements of ethical approval and

research permission granted by the ministry

Finally it was hoped that the report would meet publication requirements so

that it could get a wider audience through a reputable journal

48

39 Time scale

The study was anticipated to take the following breakdown from the time all

ethical approvals and consent were obtained

Table 1 Table showing the study time scale

Stage Time allocation Action item Accountable person

I Weeks 1 - 3 Research set up Sampling and

access to participant negotiations

Angelinah Boniface

II Weeks 4 - 12 Data collection and Analysis Angelinah Boniface

III Weeks 12 - 16 Analysis Report writing and

dissemination

Angelinah Boniface

310 Limitations and Delimitations

This study was not fully funded as such high telephone costs travelling

affected the exercise Only business people in Mauritius both men and women

were interviewed The study covered both local and foreign investors

Participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

49

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

A major limitation is a low response rate of the questionnaire and therefore a

representative sample of the SME population was not achieved Thus any

conclusions made from the analysis of the collected data cannot be

generalized to the broader SME population Bias may have been inadvertently

introduced during interviewing caused from such things as leading questions

50

CHAPTER 4

RESEARCH FINDINGS AND DISCUSSION This chapter aims to discus the research findings from the study The chapter

is divided into two sections the first part presents and discusses the

quantitative data and the second part discusses qualitative It is therefore

worth mentioning that the Putz (2000) model was used to guide the

qualitative data analysis and some of the themes were taken from the model

and some were generated from the research findings It must be noted that

any findings uncovered from this study cannot be generalized to the broad

public domain regarding SMEs

Section A of the questionnaire and the interview guide included questions that

collected background information on the SME managers and the responding

firms These data constitute the substantive material for analysis in the

ensuing sections The tables below depict the socio demographic

characteristics of the survey participants age group gender educational level

and experience as ownermanager In the following sections there aspects

are discussed

51

41 RESPONDENTS RATE ACCORDING TO SECTORS

TABLE 2

SECTOR SEHDAS SURVEY SENT

SURVEY RECEIVED

RESPONSE RATE

Leather and Garments

1678 20 12 60

Wood and Furniture

2196 20 11 55

Paper Products and Printing

1541 20 9 45

Chemical Rubber and Plastic

1376 20 11 55

Pottery and Ceramic

793 20

17 85

Jewellery and Related Items

1674 20 13 65

Fabricated Metal Products

1267 20 14 70

TOTAL 7 140 101 72

Table 2 shows the response rates from various sectors of SME in Mauritius

which were targeted by the online survey As the table indicates pottery and

ceramic sub sector had the highest response rate (85) with paper products

sector giving the least response rate (45) Overall 72 response rate from

all the targeted sectors was satisfactory It is worth mentioning that the total

number of participants adds to 140 since this question was only directed to

sectors not to other stakeholder in the research sample

52

42 DEMOGRAPHIC PROFILE PARTICIPANTS

TABLE 3 AGE GROUP AS PER PARTICPANT

AGE GROUP FREQUENCY PERCENTAGE

-25 7 43

26-35 34 211

36-45 53 329

46-55 35 217

56-65 22 137

gt 65 11 63

TOTAL 161 100

Evidence from most of entrepreneurial literature suggests that self-

employment becomes an increasingly attractive option as one nears middle

ages As can be seen in table 3 respondent‟s ages ranged from 25 to 65 and

the largest proportion (329) of the participants was in the age range of 36ndash

45 Additionally participants were biased towards the age ranges of between

36 and 65 and away from the under 25 and over 65

TABLE 4 GENDER PROFILE AS PER PARTICIPANT

GENDER

Male 116 720

Female 45 280

TOTAL 161 100

53

In relation to gender the research sample was predominantly male (72) a

striking although unsurprising demographic characteristic that reflects the

composition of the larger business sector in the country as a whole

Consequently only (28) were females This is clearly illustrated in table 4

above

TABLE 5 EDUCATION PROFILE AS PER PARTICIPANT

EDUCATIONAL LEVEL

Primary 8 50

Junior-level 29 180

O-level 78 484

Diploma 34 211

Higher Degrees 12 75

TOTAL 161 100

As evident from table 5 the educational levels attained by respondents varied

considerably as follows Primary School Certificate (8 or 5) Junior

Certificate (29 or 180) Ordinary Level (78 or 484) Diploma (34 or

211) and higher Degrees (12 or 75 ) On the whole though the data

suggest that the educational levels of our respondents are low the largest

proportion (398) possessing an Ordinary Level certificate

54

TABLE 6 YEARS EMPLOYED AS CEO AS PER PARTICIPANT

Years Of Employed as CEO

0-3 44 273

4-7 88 546

8-14 15 94

15-19 11 68

Over 20years 3 19

TOTAL 161 100

Not surprisingly table 6 shows that most of the responding executives did not

have education that emphasized a business curriculum This can be

understood with respect to the Mauritian educational curriculum which largely

overlooked business subjects until very recently

The research sample participants had been employed at their current firms on

average 1467 years and had an average of 12 years experience in the

manufacturing industry Four predominant job titles used by the senior

executives emerged from the questionnaireinterview responses Managing

Director (38) Director (26) Manager (20) and Chief Executive Officer

(16)

55

43 CHARACTERISTICS OF RESPONDING FIRMS

This section presents the descriptive statistics of the responding firms The

description focuses on age of the firm employment size firm revenues and

firm ownership

TABLE 7 COMPANY AGE PROFILE

Age of Company Frequency Percentage

1- 3 years 44 314

4- 6 years 68 486

7-10 years 19 136

11-15 years 7 50

Above 15 years 2 14

TOTAL 140 100

Table 7 displays the statistical data Of the firms responding the largest

proportion (486) was 4 to 6 years old Overall the sample reveals a skewed

distribution towards the ranges between 4 and 15 Also it is interesting to note

that 915 of the responding firms are mature that is beyond the start-up

phase

TABLE 8 EMPLOYEE PROFILE AS PER PARTICIPANT

Number of Employees

50-99 101 721

100-200 39 279

TOTAL 140 100

56

Unsurprisingly the vast majority of the responding businesses had fewer than

100 employees as depicted n table 8 with the largest proportion (701) in

the 50ndash99 employee categories The study found out that most small

companies would opt to have family and relatives as employees to minimise

costs Only 32 average of the firms were medium-size The preponderance

of small firms in the sample mirrors a more general pattern of firm distribution

in the country where medium and large firms are a conspicuous small

minority

TABLE 9 ANNUAL SALES AS PER COMPANY

Annual Sales

Less than R100 000 88 629

R101 000- R250 000 36 257

R251 000- R15 million 11 79

Above 15 million 5 35

Total 140 1000

As shown in table 9 the largest proportion of responding firms 88or 629

achieved a turnover below R10000000Only scant 11 or 79 posted annual

revenue in excess of R15 million

57

TABLE 10 OWNERSHIP AS PER PARTICIPANT

Ownership

Wholly Citizen 76 550

Joint Venture 42 293

Foreign Owned 22 157

TOTAL 140 100

Regarding ownership table 10 shows that an overwhelming majority or 550

of firms were wholly citizen-owned while the remaining 293and 157

were joint venture with citizen stake and foreign-owned respectively

44 Language

From most of the participants investors do not have to learn Local Mauritius

language since English and French are the official languages in the country

Since most of the investors to Mauritius are either English or French speaking

language as such is not a barrier to business practices and success for

prospective investors

ldquohellipwell it is not very important for foreign investors to learn languages

spoken in Mauritius because we can speak both English and Frenchrdquo

[Participant A5]

ldquohellipactually language is not barrier to English or French speaking investorsrdquo

[Participant A21]

58

Language is perhaps the most complex and perplexing aspect of the

Mauritian social mosaic (Rassool 1996) Contrary to the results that show that

language is not a problem for investors since most of the investors who come

to Mauritius are English or French speakers who normally fits well in the

society since these are the two official languages

This intricacy derives from the number of languages spoken combined with

the uses to which they are put and the socio-political connotations they bear

Baker and Stein (1977) scholars studying language use in Mauritius have

found that English is associated with knowledge French with culture

Creole with egalitarianism and other languages ancestral heritage

Consequently although Creole is the most widely spoken language in the

country French predominates in the media and English is the official

language of government and school instruction (Stein and Baker 1977)

According to the 1983 census the top five languages were Creole 541

Bhojpuri 204 Hindi 115 percen French 37 and Tamil 37 These

figures indicate the principal language used in the home Most Mauritians

however speak several languages

Literature suggests that global organizational structures need to adopt

common rules and procedures in order to have a common bdquolanguage‟ for

communicating across cultural borders (Kostova 1999 Kostova and Roth

2003 Gupta and Govindarajan 2000) This is directly reflected by the results

above that foreign investors need not to learn the local language of locals but

its important to create a common language within the organisation that is

59

understood by all stakeholders in the organisation for effective and efficient

communication

45 Religion

The study found that main religions in Mauritius are Hindu Muslim and

Christianity to a lesser extent Hindus make up approximately half of

religiously affiliated Mauritians Of the remaining Mauritians approximately a

third are Christians and about 15 Muslim followed by small Buddhist and

Sikh communities It is therefore imperative that a foreign investor considers

religion of the people of Mauritius before setting up a business Religion

The study also found out that various religions found on Mauritius tend to play

a major part in the islands cultural events and churches temples and

mosques are to be found everywhere Hindu and Tamil celebrations are part

of Mauritian cultural life

ldquohellipFestivals such as Divali (the festival of lights) Holi (in which participants

are covered in colourful powders) and Thai Poosam in which Tamil devotees

pierce their bodies with masses of needles as an act of penance are

popularly attended by Mauritianshelliprdquo [Participant A60]

ldquohelliphellipthere are also a number of diverse practices and superstitions

originating in beliefs brought from Africa and Asia Local sorcerers known as

longanistes or traiteurs are sometimes called in to settle arguments exact

revenge or administer love potionshelliphelliprdquo [Participant B41]

60

However all communities live together in harmony with each other regardless

of religion the study learnt

hellipHarmonious separatism is how we characterise our communal relations

in Mauritiushellip [Participant A13]

Since all citizens are ldquodescendants of slavery there are no tribes unlike

other African countries This has made integration and assimilation easier and

it makes it very easy for any SME to adapt to the local conditions due to pre

existing harmonyrdquohellip [Participant A13]

It is worth noting that businesses remain closed in public religious days but

the purchasing power remains the same regardless of whether it‟s a public

holiday or not

ldquohellipthe demand is not dependent on whether itrsquos a holiday or nothelliprdquo

[Participant A11]

ldquohellipit doesnrsquot matter really whether its holiday or religious holidayhelliprdquo

[Participant A21]

According to Stein and Baker (1977) the Mauritian society is noteworthy for

its high degree of religious tolerance Mauritians often share in the

observances of religious groups other than their own In part as a result of the

multiplicity of religions Mauritius has more than twenty national holidays In

addition the government grants subsidies to all major religious groups

61

according to their membership (Stein and Baker 1977)This is also evident

from the results of the research

Ethnicity religion and language have been important factors in shaping the

way Mauritians relate to each other in the political and social spheres Despite

the fact that sectarian factors are less of a determining factor in peoples

social and political behaviour they remain an important clue to the peoples

past and self-identity (Rassool 2001) As a foreign investor understanding

the religious belies of a society and taking all the necessary details in to

consideration play a major role in an international business environment

setting (Hosftede 1980) For example observing religious holiday and making

sure employees get days off and annual leaves on such important days

having prayer rooms for those willing to pray at work and creating a non-

discriminatory environment for all employees

It is worth mentioning that while religion does not have a direct impact on

Mauritius investment since it an international business hub However it is

important for investors to take note of all the aspects of religion since it plays a

very important role in lives of the Mauritians For example there are religious

holidays as an employer it is important to follow the religious holiday calendar

and give annual leaves to employees on such important days

46 Social Life

For the interest of prospective investors the study found that the social life in

Mauritius is very much close to families and friends People all meet at open

markets for normal shopping and socialise over weekends ldquoeven ministers

62

managing directors of big companies go to open marketsrdquo [Participant

A12]

There is no busy night life in the country as well as cinema and theatres

because most people prefer home video entertainment ldquoMost people found at

social places like cinemas pubs clubs etc are employees and not

employersrdquohelliphellip [Participant A12] Prospective investors should therefore

know that they are likely to meet business associates at board rooms or at

their offices rather than at social centres

In a society where tolerance is a national virtue and ethnic conflicts are

invisible to the casual visitor it takes time to learn the dos and donts of

socialising ldquohelliphere in Mauritius you must realize that we walk on eggs

continuouslyhelliprdquo [Participant B36] For a peaceful and tolerant as Mauritius

undoubtedly is the diverse groups populating the island do not collectively

make up a nation Mauritius like any other island is a nation of nations and

compromise is the order of the day be it in politics in the economy in the

media or at a dinner party the study found

The study found out that unlike other African societies Mauritius people would

prefer to stay at home and watch movies play video games with kids or visit

friends and relatives to socialise or for a night out There are not many social

night clubs in Mauritius as compared to the United Kingdom ldquohellipmany homes

today have a Digital Video Decoders (DVD) sets and donrsquot see the importance

of going out to cinemas and would helliphelliphelliprdquo [Participant A12]

63

This does not come as a surprise since literature suggests that Mauritius

though it is multicultural society and an international hub for business there

are a quiet peaceful and tolerant nation and would prefer to keep their space

(Stein and Baker 1977)

47 Market Accessibility

The study found that as first foreign investor Mauritius government has open

market programme When the free operational zone initiative began investors

imported raw materials imported duty free and foreign companies had to

show transformation of raw materials into fished exports since the

government‟s aim was to increase exports thus improve balance of trade

However in the early stages the initiative did not work as expected because

of certain barriers

Lack of adequate government incentives to lure more investors

Too much repetition meaning most of the companies where doing the

same thing

Lack of skilled human resources

The scenario is summarised by participant B3 in the following

statementldquohelliphellipour people did not have culture of businessrdquo

For more access to the markets further initiatives were put into place The

government assured investors of freedom of capital movement that is the

investors were guaranteed that they would bring their money into and out of

the country whenever they felt like doing so In addition the government

64

embarked on providing more facilities (industrial buildings) and infrastructures

all over the country opening up rural areas because towns already had

infrastructures Lastly first time investors were provided with free access to

customs thus maintaining the earlier option of tax free imports

While Mauritius was doing all these events elsewhere in the world played to

their favour European Union and USA were imposing import quotas on

Chinese and Indian imports to prevent damping So these investors had to

look for alternative markets and Mauritius turned out to be one of such

markets But the government had to act quickly to avoid bdquotransit investors‟

ldquohellipthey are investors who want to do business when it favours them but when

they begin to loose certain privileges or profits get diminished then they take

offrdquohelliphellip [Participant B3]

To avoid this foreign investors were made to transfer skills and knowledge to

local community which led to emergence of Mauritius community of

manufacturing

ldquowho started from easy stitching like socks pyjamas bras etc and later

upgraded to big Mauritius labelshelliprdquo [Participant B3]

The study further found that the initiative did not stop there The government

further established Mauritius Enterprise Development Investment Authority

(MEDIA) in 1985 which took lead in looking for prospective investors from

65

Europe USA Hong Kong and India among others Any willing investor was

transported to Mauritius and accommodated freely on government accounts to

tour the country and carry out investment feasibility studies This helped to

popularise the investment opportunities in Mauritius and attracted many more

investors Currently MEDIA has been transformed into Mauritius Board of

Investment which is no longer in charge of managing industries but

ldquopromotes Mauritius businesses abroad and participates in trade fairs to

further open uprdquo [participant B3]

The study also found out that there are specific niche markets for foreign

investment in Mauritius namely the Offshore Industry the Financial Industry

the Construction and Tourism especially in the area of high class luxury

property market in form of villas hotels and apartments and of recent the

Information Technology (IT) industry These industries cover a large spectrum

including SMEs

ldquohellipone of these sectors makes a very good investment for any investor

especially the construction industryhelliprdquo [Participant A89]

The results agree with Putz (2000) which notes that niche markets make

establishing a business by immigrants easier because the immigrants needs

for consumer goods create a specific demand This is evidence by all the

incentive the Mauritian government have put in order to attract foreign

investors in to country for the benefit of the Mauritian population Furthermore

Putz (2000) emphasise the opportunities offered by the host country including

66

access to the market and job market conditions as important factors for

international business

48 The role of ICT to SME business in Mauritius

The study found that Mauritius has a very well established ICT sector It has

formed the backbone of SME success in Mauritius As early as 1990 the

country provided hellip ldquothe fastest broadband in the world to help SME business

investors who were each allocated free 2MB internet accessrdquohellip[Participant

A 23] Recently the government has in turn invested a lot of money in

developing a cyber city a few kilometres away from the capital Port Louis

which will form the hub for future investments

This high level of ICT development in the country has created SME in areas

such as offshore financial services calls centres and enhanced tourism

industry growth Any prospective investors are guaranteed of highly

developed ICT backed up by highly qualified local human resources The

offshore investment sector has even been further boosted byhellipldquobilateral

agreements with India allowing companies registered in Mauritius to transfer

funds to India tax freerdquohellip[participant B13]

It is hoped that in helliprdquo5 years time the whole island will have free wifi

connectivityrdquo participant B33 The country not only makes use of its advanced

ICT sector but has become a big player in the region as well For example

Mauritius state informatics computerised South African government in 1996 It

has also won other computerisation contracts in Zambia Zimbabwe Namibia

Kenya and Ghana To sustain such success ldquopartnerships have been formed

67

with global players such as Microsoft to provide training not just to Mauritius

nationals but other scholars from the South Eastern Africa region as

wellrdquohellip[participant B13]As matter of fact the government of Mauritius has

invested billions in building s cyber-city a few miles aware from the capital

Port Louis

ldquoits opening in July this year and it is expected to be the centre of attraction

for investorsrdquo [Participant B13]

ldquoactually the government invested in this cyber-city with the intention to

attract European and American investorsrdquo [Participant A6]

From these results there is evidence that technology plays a major role in

SME development Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

68

48 Governance and the role of women in SME sector

in Mauritius

Mauritius is a multicultural country with ldquo70 of the population of Chinese

Indian ancestry 2 white French origin and the remaining mixed race ndash

creolesrdquo [participant A17] Europe has not have a lot if cultural influence on the

country and predominant cultures are Asian African cultures Study found

that common folklore popular songs in Mauritius would also be ordinary

found on other African countries such as Senegal Mozambique Cameroon

and Sierra Leone among others signifying deep rooted African traditions

The government maintains ndash discrimination laws for either gender In the early

stages of SME development women provided the bulk of the labour in the

rural areas as industries moved away from cities into the rural areas There

are concerted efforts to get women into jobs especially leadership roles

ldquowomen themselves are too slow to act and take advantage of the

government incentivesrdquo

The study found out that woman in Mauritius do not occupy positions of

strategic power decision making This is not a surprise because it is the same

with most Southern African countries The government of Mauritius has put a

lot of structures to support women in business but women are taking it slow to

utilize these structures

69

There are many government agencies and organizations headed by women

and even cabinet posts but most women would rather stay out of politics

becausehelliphellipldquopolitics can get very dirty involving personal lives of politicians

which men donrsquot mind but women do mind a lot aboutrdquohellip[participant A 17)

However in other sectors like education and healthcare there are many

women represented in the labour force

The study also found out that just like any other society one can not ldquohellipstop

some kind of abuse for both males and females There are cases of both

female and male harassment but the law comes in to protect such victims

There are also cases of petty crime and rape involving women either as

perpetrators or victimsrdquohellip [Participant A13]

According to AllAfrica Global Media (2008) the winds of change are blowing

across the island of Mauritius and many men in this traditionally conservative

nation are working hand in hand with women to see that the common sense of

gender equality prevails The absence of women at the decision-making table

usually means the absence of their priorities and needs Irrespective of the

Southern African Develoment Community (SADC) Declaration there are so

few women in politics This is evident from the results of the study which found

that women will rather do health jobs and education than to play the dirty

tricks of politics

Women councillors make up a mere 37 in the Moka-Flacq District Council

This is the lowest figure not only in Mauritius but also in the SADC region

70

This is far from the 2005 30 target not to mention the 50 goal now being

set for the region and included the draft Protocol on Gender and Development

up for review at the August SADC Heads of State Summit ( AllAfrica Global

Media 2008)The results found out that there is also a few representations of

women in business Women do mostly the dirty jobs of caring for children and

their families and do not have the courage to enter the business sector This is

not surprising especially in the SADC region women play the minority role

and are rarely represented at the strategic decision making level hence their

needs are always neglected resulting in women poverty

49 Challenges faced by the country and hence SME investors

Stiff competition from other countries such ashelliphellipldquoBotswana Vietnam and

South East Asia in the textile industry due to cheap labour Maldives and the

Caribbean Islands for tourism difficult in Training enough qualified personnel

in ICT to cope with demand International competition and access to fundsrdquo

hellip[participant B13]

To face these challenges the study found that the country has expanded

tertiary education and formed partnerships with foreign universities such as

ldquoFrench Scientific University which has been running Medical school in

Mauritius for 10 years By the time of this study an agreement had been

reached by Thames valley university (UK) to open up campus in

Mauritiusrdquohellip[participant B15] The aim of the government is to offer high

quality education to students from the region as well as far away like China at

affordable cost and to compete with European universities Further to

71

educational development the study also found out that the country is striving

to create partnerships with ldquoresearch organisations and to create high quality

healthcare so as to benefit from health tourism where would just travel to the

country to get affordable high quality specialised health carerdquohelliphellip [Participant

A3]

Finally results show that there is stiff competition from different sectors of

business and other force which needs to be taken into consideration when

doing business internationally Globalization tends to redistribute economic

rewards in a non-uniform manner a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) It essential to know all

the factors surrounding the business sector and understanding all the

business practices before investing to avoid any loss

72

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

Research on culture and IB is definitely a bdquogrowth‟ area because the business

world is in many ways becoming one The researcher concluded the following

based on study findings

Firstly the cultural diversity and harmony of the island make Mauritius a

unique place in the world It is also known for its social peace political stability

and racial harmony Its steady economic growth over the years coupled with

its nation‟s social cohesion and prosperity ensure continuing development

Secondly Mauritius enjoys a literacy rate over 80 percent Skilled labour

graduates and qualified professional including lawyers engineers IT

programmers consultants accountants and chartered secretaries are

available to suit virtually all business needs in two international languages

English and French Language is therefore not a barrier to foreign investment

In addition academic training at the University of Mauritius and the newly

established University of Technology a comprehensive system of vocational

training through the Industrial and Vocational Training Board (IVTB) ensures a

ready supply of skills in a number of fields such as tourism engineering

electronics jewellery ICT printing and textiles

Thirdly In view of the importance of foreign investment as a source of

sustenance to economic growth the government of Mauritius has taken a

series of policy measures to encourage its flows into manufacturing offshore

73

banking and financial services information technology communication and

tourism As far as foreign investors are concerned Mauritius offers itself as an

attractive destination because several positive features such as political

stability availability of skilled labour and investment-friendly rules and

institutions

Fourthly after a sustained growth path over the last three decades based on

sugar textiles and tourism Mauritius is now shifting gears to move towards a

higher stage of economic development so as to consolidate its position as a

premier international hub Foreign Direct Investment (FDI) has played an

important role in the development of Mauritius and will again be decisive when

the country embarks on high value-added capital intensive and knowledge-

based activities

Fifthly the government plays the role of a facilitator and has endeavoured at

all times to create the most conducive investment environment by enacting

appropriate legislations building state-of-the-art infrastructure investing in

human capital and introducing packages of investment incentives for the

manufacturing financial services and ICT sectors so as to enhance the image

of Mauritius

In this respect the Board of Investment (BOI) is the first contact point for

anyone investing in Mauritius Operating under the aegis of the Ministry of

Finance the BOI was established in March 2001 under the Investment

74

Promotion Act to give a new impetus to foreign direct investment The BOI is

the apex organization for the promotion and facilitation of investment in

Mauritius The primary role of BOI is to stimulate the development expansion

and growth of the economy by promoting Mauritius as a competing business

and service centre It aims at streamlining the legal framework and to make

better provision for the promotion and facilitation of investments in Mauritius It

acts as a facilitator and provides a one-stop shop service to both local and

foreign investors ensuring reliable and speedy processing of applications The

BOI receives processes and approves all applications for investing in

Mauritius It also assists investors in obtaining the necessary secondary

permits and clearances from relevant authorities thus ensuring a speedy

implementation project

Six Mauritius pursues a liberal investment policy and actively encourages

foreign direct investment in all sectors of the economy Attractive packages of

both fiscal and non-fiscal incentives tailor-made to the needs of each priority

area of development are offered to investors Excellent opportunities for

investment in Mauritius exist in various sectors of the economy including

manufacturing information technology knowledge industry regional

headquarters tourism and leisure financial services Freeport activities

amongst other sectors Some of the priority areas are in Information and

Communication Technology which is set to a play a lead role in the economic

development of the country in the medium and long terms The availability of

high bandwidth connectivity (with SAFE Project and international Gateways)

at near global parity in quality and tariff on the one hand and the setting up of

75

dedicated IT habitats including the Cyber city at Ebeacutene on the other hand

plus total Government support to this industry are testimony of the importance

of this industry to Mauritius Others include the manufacturing sector textiles

and apparel the spinning sector electronics and light engineering medicals

and pharmaceuticals agro-business leather products and jewellery and

watches

The export-oriented manufacturing sector has been the backbone of the

Mauritian economy for the past three decades This sector remains a major

constituent of the Mauritian economy in terms of foreign exchange earnings

employment and contribution to GDP and is called upon to continue to play

an important role in the consolidation and diversification of the industrial base

of the country certain

Lastly some incentives provided by government to foreign investors In the

manufacturing sector these include among others

No customs or duty or sales tax on raw materials and equipment

No tax on dividends

No capital gains tax

Free repatriation of profits dividends and capital

50 relief on personal income tax for expatriate staff

New incentives for the ICT Sector consist inter alia of

the availability of tax holiday up to year 2008 for specified

pioneering high-skills ICT operators typically geared towards the

export market such as software development multi-media and to

high-level ICT training institutions

76

customs duty-free import of ICT and similar equipment

50 relief of personal income tax for a specified number of foreign IT

staff

duty-free import of personal belongings of foreign IT staff

effective fast track procedure for procession of visa and work

permits for foreign staff including spouses

From the above the research concludes that Mauritius being a multicultural

society as it is the culture they share does not have a direct impact on

investment in Mauritius because of it is an international hub for business It is

also expected that from the results the situation is not going to change after

time but will keep in this shape for a long since it is the government incentive

to attract more investors into the country However there are certain aspect of

culture eg believes that foreign investors need to understand and take into

consideration This study recommends any prospective investor to make good

investment in to Mauritius without fear

77

CHAPTER SIX

REFLECTIONS FROM THE STUDY

The views derived from this study might not be directly applicable to the whole

region because of variations in socioeconomic settings in various parts of the

Mauritius Also views expressed in this study were obtained mainly from

urban based managers and respondents and might not be similar to rural

based SMEs from the same community or area

Some scholars might not support the sampling techniques used but they

were the most practicable given the circumstances

Legal practitioners in Mauritius were supposed to be part of the sample but

they were hard to reach with some declining to participate

Demographically and geographically the sites were larger than anticipated

given the time and resources available for the study

Lastly the study was limited to the previous 20 years which might have

yielded same generational trend missing the opportunity to get data across

various generations within the sites

78

CHAPTER SEVEN

FUTURE RESEARCH

With more funding and resources a similar study could be conducted

throughout a wider geographic region and encompassing all categories of

SMEs micro small and medium Furthermore with more time a greater

number of interviews could be conducted which would provide richer data that

would be more in depth for conclusive analyses to be made Additionally

participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

79

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

WORD COUNT 16 969

80

APPENDICES APPENDIX 1 MauritiusData Profile

2000 2005 2006

World view

Population total (millions) 119 124 125

Population growth (annual ) 10 08 08

Surface area (sq km) (thousands) 20 20 20

Poverty headcount ratio at national poverty line ( of population)

GNI Atlas method (current US$) (billions) 444 653 681

GNI per capita Atlas method (current US$) 3740 5250 5430

GNI PPP (current international $) (billions) 891 1239 1334

GNI per capita PPP (current international $) 7510 9970 10640

People

Income share held by lowest 20

Life expectancy at birth total (years) 72 73 73

Fertility rate total (births per woman) 20 20 20

Adolescent fertility rate (births per 1000 women ages 15-19) 39 40 41

Contraceptive prevalence ( of women ages 15-49)

Births attended by skilled health staff ( of total) 100 99

Mortality rate under-5 (per 1000) 18 15 14

Malnutrition prevalence weight for age ( of children under 5)

Immunization measles ( of children ages 12-23 months) 84 98 99

Primary completion rate total ( of relevant age group) 105 97 92

Ratio of girls to boys in primary and secondary education () 98 100 103

Prevalence of HIV total ( of population ages 15-49) 06

Environment

Forest area (sq km) (thousands) 04 04

Agricultural land ( of land area) 557 557

Annual freshwater withdrawals total ( of internal resources)

Improved water source ( of population with access) 100

Improved sanitation facilities urban ( of urban population with access) 95

Energy use (kg of oil equivalent per capita)

CO2 emissions (metric tons per capita) 23

Electric power consumption (kWh per capita)

Economy

GDP (current US$) (billions) 447 629 635

GDP growth (annual ) 40 46 35

Inflation GDP deflator (annual ) 37 48 41

Agriculture value added ( of GDP) 6 6 6

Industry value added ( of GDP) 31 28 27

Services etc value added ( of GDP) 63 66 68

Exports of goods and services ( of GDP) 63 57 60

Imports of goods and services ( of GDP) 65 61 67

Gross capital formation ( of GDP) 26 23 25

Revenue excluding grants ( of GDP) 220 214 215

Cash surplusdeficit ( of GDP) -11 -21 -30

States and markets

Time required to start a business (days) 46 46

Market capitalization of listed companies ( of GDP) 298 416 567

Military expenditure ( of GDP) 02 02

Fixed line and mobile phone subscribers (per 100 people) 39 82 90

Internet users (per 100 people) 73 241 145

Roads paved ( of total roads) 97

High-technology exports ( of manufactured exports) 1 2 24

Global links

Merchandise trade ( of GDP) 82 84 91

Net barter terms of trade (2000 = 100) 100 109 115

External debt total (DOD current US$) (millions) 1713 2153 1997

Short-term debt outstanding (DOD current US$) (millions) 767 1363 1363

Total debt service ( of exports of goods services and income) 181 72 71

Foreign direct investment net inflows (BoP current US$) (millions) 266 39 107

Workers remittances and compensation of employees received (US$) (millions)

177 215 215

Official development assistance and official aid (current US$) (millions) 20 34 19

Source World Development Indicators database April 2008

81

APPENDIX 2

SUMMARY GENDER PROFILE (Mauritius)

Mauritius

Sub-Saharan Africa

Upper middle income

1980 1990 2000 2004 1980 2004 1980 2004

GNP per capita (US$) 1210 2300 3690 4640 652 601 2391 4769

Population

Total (millions) 10 11 12 12 3850 7258 4394 5762

Female ( of total) 507 501 502 503 503 501 515 514

Life expectancy at birth (years)

Male 63 66 68 69 47 46 63 66

Female 69 73 75 76 50 47 71 73

Adult literacy rate ( of people aged 15+)

Male 848 884 954

Female 750 805 942

LABOR FORCE PARTICIPATION

Total labor force (millions) 0 0 1 1 157 299 193 256

Labor force female ( of total labor force)

37 34 34 35 43 42 42 41

Unemployment

Total ( of total labor force)

33 88 102 12

Female ( of female labor force)

36 96 126 134

EDUCATION ACCESS AND ATTAINMENT

Net primary school enrollment rate

Male 91 96 94 68

Female 92 97 96 60

Progression to grade 5 ( of cohort)

Male 97 99

Female 98 99

Primary completion rates ( of relevant age group)

Male 61 105 98 66 95

Female 63 104 102 56 96

Youth literacy Rate ( of people aged 15-24)

Male 912 937 978

Female 911 954 974

HEALTH

Total fertility rate (births per woman)

27 23 20 20 67 53 31 20

Contraceptive prevalence ( of women aged 15-49)

75 26 76 22 69

95

82

APPENDIX 3

DATA COLLECTION FORM FOR THE SURVEY Sitehelliphelliphelliphelliphellip Participant numberhelliphelliphelliphellip MANAGING DIRECTOR CEO MANAGER

Age group -25 26 ndash 35 36 - 45 46-55 56-64 65+

Education Nursery ndash Standard 4

Std 5 ndash 7 (8) Form 1 ndash 2

Form 3 ndash 4 or A level

College University

Employment Yes No Business (what type)

Partnership Whole Citizen

Joint Venture

Age of Company

1-3 years 4-6 years 7-10 years

11-15 Above 15yrs

Number of Employees

10-25 50-99 100-149 150-200

Place of birth

In the constituency

Outside the constituency

Where

Residence Rural Urban Where

Before starting business

After business

Children

Boys Number

Girls Number

Any born a Yes None

Are they in school

Yes No Some

Working Yes No Some

Annual Sales

Balance Sheet

Less than R1000000

R101 000- 250 000

R251 000- 15 million

R 15 million +

Years Employed as CEO

0-3 4-7 8-14 15-19 Over 20 years

83

APPENDIX 4 Qualitative data questionnaire The following questions were used as a guide during the focus group discussions However they were not followed in the strict order or wording as they appear here

SOCIAL INCLUSION EXCLUSION

I am going to ask you questions regarding support you think the society could give foreign investors There is no right or wrong answers it is just about your opinion

a) How do you feel about foreign investors coming to Mauritius

b) How has your friendship with foreign business before and after they arrive in Mauritius

c) Do you keep in touch with foreign businesses around you and prospective investors

d) In your opinion how does foreign business feel about Mauritius

e) Are foreign businesses doing well or badly

f) What support structures or government incentives are there for foreign investors

g) What kind of support would you like to receive from the government

BUSINESS ATTITUDE AND BELIEFS

I am now going to ask you some general questions about business and your opinions about it

a) How would you describe the general business environment

b) Do you find it difficult to do business with people from different countries of the world Why

c) What do you believe the first thing to do on the morning before opening

your business (Local people) Why

d) How best can the Mauritius people be motivated into business How do you get over them

84

e) What areas do local people consider as niche areas for foreign

business

f) How do local people organize their business Why

g) As a local business person what would you consider as abomination of business in Mauritius Why

h) What is the role of women in the business sector

CULTURE

I am now going to ask you questions about the your culture

a) What are your views about business culture in Port Louis

b) What are the challenges of national culture on business practices in your opinion

c) What are the benefits of culture on business practice

d) Do you think foreign investors need to know the local language when investing in Mauritius

e) If you were to advice a foreign investor what would you want them to know about Mauritius

f) How do you think the family daily practice influences business in

Mauritius

g) What business actions of behaviors are sensitive to the local people

h) How best can foreign investors assimilate with the local business people

i) What do local people like to buy on weekends week days public religious holidays

j) What marketing strategies violet the culture of Mauritius ndashwomen naked Eating behavior Etc

85

APPENDIX 5

Introductory letter consent form

TITLE CULTURE AND INTERNATIONAL BUSINESS

ENTREPRENUERSHIP A CASE STUDY OF MAURITIUS

INTRODUCTION

I am Angelinah Boniface a student pursuing Masters of Science in

Information Systems the University of Sheffield United Kingdom I am

conducting a study on the Impact of culture on small and medium

enterprises for my dissertation The study is expected to last 3 months and a

report of the findings will be availed to all interested stakeholders including the

university as part of course requirements

PURPOSE OF THE STUDY

This study is intended to gain insight into views and opinions about

widowhood and inheritance in relation to health and well being of participants

and the community at large Evidence from this study may be useful in future

government and development agencies‟ planning and provision of relevant

interventions for the benefit of the whole community

VOLUNTARINESS AND CONFIDENTIALITY

Your participation in this study is purely voluntary and you can withdraw

at any time should you feel uncomfortable to proceed Information obtained

from this study will be used for no any other purpose other than the

dissertation It will be kept confidential only accessible to the researcher and

pseudonyms will be used to ensure anonymity and confidentiality of

participants and location The researcher will strive to treat all participants

with dignity respect equality and minimise possible harm that might arise

from the study

Agreeing to take part in this study will be treated as your consent to be

involved in this research BUT YOU HAVE THE RIGHT TO WITHDRAW

THE CONSENT

86

RISKS AND BENEFITS

There are no risks to the questions that will be asked If at any point you feel

uncomfortable to answer any question please feel free to ignore such to avoid

any harm

There is likely to be no immediate benefits to you as a participant However

the information obtained in this study will go a long way in informing the

younger generation and wider audience about the culture It might also be

used by the government and other development agencies to plan for

interventions relevant to the needs of widows in your community in the future

based on the evidence you have provided in this study

CONTACTS

The researcher can be contacted at +44 0791263163 lip07acbshefacuk

or linabonyahoocom in case of any questions issues

In case of any problems that need university attention my supervisor can be

contacted at kalbrightshefacuk

PLEASE DONrsquoT TAKE PART IN THIS STUDY IF YOU ARE BELOW 18

YEARS OF AGE

Thank you very much for your anticipated cooperation

Researcher‟s signature Participant‟s signature

helliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

87

REFERENCES

Bhagat RSet al (2002) Cultural variations in the cross-border transfer of

organizational knowledge an integrative framework Academy of

Management Review 27(2) 204ndash221

Boyacigiller NA amp Adler NJ (1991) ldquoThe parochial dinosaur organizational

science in a global contextrdquo Academy of Management Review 16(2) 262ndash

290

Bowling A (ed) (2002) Research methods in health Investigating health and

health services Buckingham Open University press

Dabee R and Greenway D (2001)The Mauritian Economy A Reader

PalgraveNew York

Dawson C D (2002) Practical research methods A user friendly guide to

mastering research techniques and projects Oxford How to Books Ltd

Denscombe M (ed) (2007) The good research guide for small scale social

research projects Berkshire Open University Press

Denscombe M(ed) (2003) The good research guide For small scale social

research projects Maidenhead Open University Press

Economic And Social Research Council (2005) ESRC research ethics

framework [online]

httpwwwesrcsocietytodayacukESRCInfoCentreopportunitiesresearch5

Fethics5Fframework [ Accessed May 05 2008]

88

Gilbert N (ed) (2001) Researching social life London Sage Publishers

Grbich C (1999) Qualitative research in health An introduction London

Sage publications

Hunter D amp Lang T (1993) The Leeds declaration Leeds Nuffield Institute

for Health

Neuman L W(ed) (2000) Social research methods qualitative and

quantitative approaches Needham Heights MA Allyn amp Bacon

Maynard M amp Purvis J (1994) Researching womens lives from a feminist

perspective London Taylor and Francis group

Muuka GN (2002) Africas informal sector matters a challenge to scholars

to close the knowledge gap Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

Business and Development International Conference Port Elizabeth April 3-

6 pp1-6

Southwood R (2004)The impact of ICT on SMEs ndash a motor for future

economic growth in hard-pressed times [Online] Balancing Act news update

wwwbalancingact-africacomnewscurrent1html [Accessed 26 January

2008]

Machacha L (2002) Impact of information technology on small and medium

enterprises (SMEs) in Botswana Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

89

Business and Development International Conference Port Elizabeth April 3-

6 pp277-82

Organisation for Economic Co-operation and Development (OECD)

(2000)OECD study highlights role of small and medium enterprises in job

creation Organisation for Economic Co-operation and Development

[Online]wwwoecdorgmediapublishpb00-11ahtm [Accessed 8 July 2008]

Commonwealth Secretariat UK (2006) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius London Commonwealth

Secretariat

Reed DM (1998) Using the Business Excellence Model in Small Service

Business British Quality Foundation

Taylor AW amp Adair RG (1994) ldquoEvolution of Quality awards and self

assessment practices in Europe a case for considering organisation sizerdquo

Total quality Management 5 (4) 227-237

United Nations (1993) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

Johanson J amp Wiedersheim-Paul F (1995) The Internationalization of the

Firm - Four Swedish Cases Journal of Management Studies 20 (3) 123-139

90

Chui ACW Lloyd AE and Kwok CCY (2002) The determination of

capital structure is national culture a missing piece to the puzzlerdquo Journal of

International Business Studies 33(1) 99ndash127

Earley PC amp Gibson CB (2002) Multinational Teams A New Perspective

Lawrence Earlbaum and Associates Mahwah NJ

Gibson CB (1999) ldquoDo they do what they believe they can Group-efficacy

beliefs and group performance across tasks and culturesrdquo Academy of

Management Journal 42(2) 138ndash152

Hofstede G (1980) Cultures Consequences International Differences in

Work-Related Values Sage Newbury Park CA

SMIDO (2006)A new Vision For SMEs Development Mauritius

Government Printer Port Louis

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Stone A (1997) SMEs and Technology why should we make special efforts

to help World Bank

Bhagat RS et al (2003) Knowledge in Cross-Cultural Management in Era

of Globalization Where Do we Go from Here in D Tjosvold and K Leung

91

(eds) Cross-Cultural Management Foundations and Future Ashgate Englan

155ndash176

Cairncross F (2001) The Death of Distance Harvard Business School Press

Boston MA

Commonwealth Secretariat UK (2005) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius Commonwealth Secretariat

Drucker PF (1995) Managing in a Time of Great Change Truman Talley

BooksDutton New York

Guilleacuten M (2001) ldquoIs globalization civilizing destructive or feeble A critique

of five key debates in the social science literaturerdquo Annual Review of

Sociology 27 235ndash260

Gibson CB and Cohen SG (2003) Virtual Teams that Work Creating

Conditions for Virtual Team Effectiveness Jossey-Bass San Francisco

Grazol P et al(2004) ldquoThe Effect of Culture on IT Diffusion Email and Fax in

Japan and the US Information Systems Researchrdquo Journal of International

Consumer Marketing 16 4 pp 29-64

Greider W (1997) One World Ready or Not Crown Business New York

92

Gertler MS (1997) The Invention of Regional Culture In Lee R and Willis J

eds Geographies of Economies London Arnold

Govindarajan V and Gupta AK (2001) The Quest for Global Dominance

Transforming Global Presence into Global Competitive Advantage Jossey-

Bass San Francisco

Haire M et al(1966)Managerial Thinking An International Study Wiley

New York

Heuer M et al(1999) Cultural stability or change among managers in

Indonesia Journal of International Business Studies 30(3) 599ndash610

Hofstede G (1997) Cultures and Organizations Software of the Mind New

York McGraw-Hill

Hofstede GH (2001) Cultures Consequences Comparing Values

Behaviors Institutions and Organizations Across Nations London Sage

Publications

Hoecklin L (1995)Embedded Autonomy States and Industrial

Transformation Princeton NJ Princeton University Press

93

IBP USA (2002) Mauritius Investment and Business Guide IB Tauris and Co

LTD London

Kerr C et al (1960) Industrialism and Industrial Man Harvard University

Press Cambridge MA

Kirkman BL amp Shapiro DL (2000) ldquoUnderstanding why team members

won‟t share an examination of factors related to employee receptivity to team-

based rewardsrdquo Small Group Research 31(2) 175ndash209

Lisenda L (2003) Small and medium-scale enterprises in Botswana their

characteristics sources of finance and problems BIDPA Gaborone

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Meredith GG (ed) (2004) Small Business Management in Australia

McGraw-Hill Sydney

Mistry PS (1999) ldquoCommentary Mauritius ndash quo vadisrdquo African Affairs 98

(393) 551ndash69

Mullins LJ(ed) (1999) Management and Organizational Behavior 5th ed

London Financial Times Pitman

94

Myers MDamp Tan FB (2002) ldquoBeyond Models of National Culture in

Information Systems Researchrdquo Journal of Global Information Management

10 (1) 112-134

Putz R (2000) ldquoCulture and entrepreneurship views from the middle and

lower level managersrdquo Journal of Business Ethics 22 145- 153

Scottish Economic Statistics Scottish ExecutiveONS IDBR (2005)Size

Analysis of Welsh Business SDR 692004Statistical Press Release URN

0440

Straub D et al (2002) rdquoTowards A Theory-Based Measurement of Culture

Journal of Global Information managementrdquo 10 (1)

Schaeffer RK (2003) Understanding Globalization The Social

Consequences of Political Economic and Environmental Change Rowman amp

Littlefield Lanham MD

SMIDOA new Vision For SMEs Development(May 1996)

SMME Task Force Report (1998) Small medium and micro-enterprises task

fore force report Government Printer Ministry of Commerce and Industry

Sondergaard M amp Hofstede G (1994) ldquoA study of Reviews Citations and

Replicationsrdquo Organization Studies 15 (3) 447-456

95

Schein EH (1992) Organizational Culture and Leadership Jossey-Bass

San Francisco

Stone A ( 1997) SMEs and Technology why should we make special efforts

to help (World Bank 1997)

Statistical Press Release (2005) URN 0592 Office for National Statistics

Weisinger JYamp Trauth EM (2002) ldquoSituating Culture in the Global

Information Sectorrdquo Information Technology amp People 15 (4) 306-320

United Nations (2005) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

vii

LIST OF ABBREVIATIONS

BIDPA Botswana Institute for Development Policy and Analysis BOI Board of Investment ESRC Economic And Social Research Council EPZ Export Processing Zones FDI Foreign Direct Investment GDP Gross Domestic Product GSP General System of Preferences IB International Business ICT Information Communication Technologies ILO International Labour Organisation IT Information Technology ISO International Organization for Standardization IVTB Industrial and Vocational Training Board MEDIA Mauritius Enterprise Development Investment Authority MNC Multinational Companies NAFTA North American Free Trade Agreement NHPA National Handicraft Promotion Agency OECD Organisation for Economic Co-operation and Development SADC Southern African Development Community SEHDA Small Enterprises amp Handicraft Development Authority SME Small and Medium Enterprise SMME Small medium and micro-enterprises SMIDO Small amp Medium industries Development Organisation UK United Kingdom UN United Nations USA United States of America WTO World Trade Organization

viii

LIST OF ILLUSTRATIONS TABLES Table 1 THE STUDY TIME SCALE

2 RESPONDENTS RATE ACCORDING TO SECTORS

3 AGE GROUP AS PER PARTICPANT

4 GENDER PROFILE

5 EDUCATION PROFILE 6 YEARS EMPLOYED AS CEO 7 COMPANY AGE PROFILE 8 NUMBER OF EMPLOYEES 9 ANNUAL SALES 10 OWNERSHIP

FIGURES 1 MAP OF MAURITIUS SHOWING ALL PROVINCES

2 MAURITIUS MAP SHOWING POLITCAL DIVISIONS

3 THE DYNAMIC OF TOP-DOWN-BOTTOM-UP PROCESS ACROSS LEVELS OF CULTURE

4 PUTZ MODEL FOR IMMIGRANT BUSINESS AND CULTURE

5 THE BASIC MECHANISM OF INTERNATIONALISATION-STATE AND CHANGE ASPECT

ix

ABSTRACT

In this new millennium few executives can afford to turn a blind eye to global

business opportunities The globalizing wind has broadened the mindsets of

executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories One such new

trajectory is the concern with national culture Whereas traditional IB research

has been concerned with economic legal issues and organizational forms and

structures the importance of national culture has become increasingly

important in the last two decades largely as a result of the classic work of

Hofstede (1980) National culture has been shown to impact on major

business activities from capital structure (Chui et al 2002) to group

performance (Gibson 1999)

The purpose of this study was to understand the concept on how to penetrate

a new international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

Data was collected through telephone interview web survey literature review

and face to face interview involving business managers legal stakeholders

and government officials and former government ministers About 17

telephone interviews were done with only government officials 4 face to face

interviews and 140 web survey interviews questions All the respondents were

x

randomly selected and respondents would suggest further participants Data

was put in to categories and themes and analysed according to those themes

Putz (2000) model was used as guide to selection of themes

Findings revealed the following 1 Language and religion are not a barrier to

foreign investment in Mauritius 2 Mauritius is a peaceful and tolerant nation

and most of its social life revolves around family and friends 3 Market

opportunities exits in the manufacturing industry offshore financial services

cyber culture and the construction industry 4 The country‟s business

economy faces stiff competition from Botswana South Africa and Vietnam 5

The government plays an important role in ensuring security for foreign

investors

From the results it was concluded that culture plays an important role in the

daily lives of the Mauritian people but it does not have a direct impact to

investment in Mauritius

1

CHAPTER ONE

INTRODUCTION

Globally Small and Medium Enterprises (SMEs) are increasingly regarded as

vital for diversifying economies through the creation of employment

(Machacha 2002 p 277) The OECD (2000) notes that small and medium-

sized enterprises account for 60-70 percent of jobs created in member

countries Southwood (2004) in discussing the status of the SME sector in

Africa observed that governments and large corporations dominated

economies of the countries yet the real engine of economic growth lay with

SMEs Muuka (2002 p 1) in discussing the SME sector in Africa noted that

the informal sector is huge due to the large numbers of employees it absorbed

as a consequence of inadequate jobs and opportunities in the formal sector

The author points out that in many African countries the informal sector is

estimated to employ from three to six times the number of employees in the

formal sector However very little has been documented through research

about this important sector

In Mauritius the Mauritian government believes that the real engine of

sustainable and equitable growth is in the SME sectors Not only is it of great

importance for the rate of job creation and income generation but also it

deserves particular attention since the sector has been largely neglected in

the past In this respect this study of Mauritius is important in addressing

some of issues of culture by using the International business as a framework

for this study to understand the business environment in Mauritius and the

potential for growth in a global perspective (Stone 1997)

2

In this new millennium few executives can afford to turn a blind eye to global

business opportunities Japanese auto-executives monitor carefully what their

European and Korean competitors are up to in getting a bigger slice of the

Chinese auto-market Executives of Hollywood movie studios need to weigh

the appeal of an expensive movie in Europe and Asia as much as in the US

before a firm commitment The globalizing wind has broadened the mindsets

of executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories

However research shows that as markets competition and organisations

globalise the business people businesses themselves and consumers

involved in these institutions increasingly have to interact manage negotiate

and compromise with people from different cultures (Hofstede 1997

Hoecklin 1995) Global business managers report that when doing business

overseas challenges mount For example structural conditions physical

social and economic arrangements can affect business operations and

outcomes as can the varied norms and behaviours that come with different

national cultures

One such new trajectory is the concern with national culture Whereas

traditional IB research has been concerned with economiclegal issues and

organizational forms and structures the importance of national culture

broadly defined as values beliefs norms and behavioral patterns of a

national group (Hofstede1980) has become increasingly important in the last

two decades largely as a result of the classic work of Hofstede (1980)

3

National culture has been shown to impact on major business activities from

capital structure (Chui et al 2002) to group performance (Gibson 1999) For

reviews see Boyacigiller and Adler (1991) and Earley and Gibson (2002)

Weisinger and Trauth (2003) report that culture evolves and takes unique

forms in local offices of organizations This means that culture is both dynamic

and situated in its local context Thus external conditions both structural and

cultural can influence global business Yet small and medium enterprise

(SMEs) managers can have an impact on how their organizations‟ cultures

evolve Therefore strategic leaders need to introduce unique norms values

and processes that fit together coherently in successful organizations

Therefore the main purpose of this case study is to explore and understand

the Small Medium Enterprise (SMEs) business environment in Mauritius and

how SMEs can penetrate the business culture there

The purpose of this paper is therefore to explore and understand how national

culture influences international business decisions and how to culture affects

international business investment using Mauritius as a case study

In this chapter the author outlines the background of the study specifies the

study objectives describes the significance of the study gives methodological

overview and finishes off by outlining definitions of key terminologies

4

11 Background to the Study

Strategically located in the Indian Ocean at the crossroads of Africa and Asia

Mauritius is reputed for its beautiful countryside and its 150 kilometres of white

sandy beaches and transparent lagoon A British colony that gained

independence in 1968 officially known as Republic of Mauritius the country is

positioned to the east of the Madagascar Islands The geographical

coordinates of the nation are 20ordm17 South latitude and 57ordm33 East longitude

The total area covered by the island nation is 2040 square kilometres

Mauritius enjoys a maritime sub-tropical climate and is therefore an all-year-

round holiday destination From a monocrop economy depending mainly on

sugar it has diversified its economic activities into textile and apparel

industry tourism and financial service Mauritius has witnessed a massive

development in the last decades (SMIDO 2006)

5

Figure 1 Map of Mauritius showing all Provinces

Source Encarta World atlas online

6

Figure 2 Mauritius map showing political divisions of the country

Source Maps of the world online

The research area was around the capital city Port Louis marked in red For

anonymity the site was just called A or B Administratively Mauritius is divided

into nine Provinces (figure 2)

The country is remarkable in its ethnic diversity It forms a unique mosaic of

immigrants from the Indian sub-continent Africa Europe and China The

cultural diversity and harmony of the island make Mauritius a unique place in

the world The various religions found on Mauritius tend to play a major part in

7

the islands cultural events and churches temples and mosques are to be

found everywhere Hindus make up approximately half of religiously affiliated

Mauritians followed by Muslims and Christianity as the minority It is also

known for its social peace political stability and racial harmony Its steady

economic growth over the years coupled with its nation‟s social cohesion and

prosperity ensure continuing development (Country Profile 2005)

The country is equipped with a highly skilled labour force to suit virtually all

business in two international languages English and French and a very good

infrastructure thereby attracting Foreign Direct Investment The average

economic growth was 56 over the last 3 years The income per Capita has

reached 4000 US Dollars As a result the standard of living has gone up The

country has now a life expectancy rate of 714yrs an adult literacy rate of 83

(Country Profile 2005)

To face globalisation and a new economic environment the Government has

taken several steps High value-added capital intensive and knowledge-

based activities are on the priority list The Information Technology sector is

undergoing rapid changes so as to be fit for the next millennium The aim is to

make Mauritius a centre for high-tech and software services which can be

exported (Commonwealth Secretariat 2006)

8

12 An Overview of Mauritian Economy

The economy of Mauritius has experienced major structural transformation

over the last two decades The country has moved away from a mono-crop

economy with fast population growth high unemployment and low per capita

income to one that is more dynamic and diversified The sources of

diversification have been agriculture export manufacturing (mainly textile)

tourism and more recently international services with Offshore and Freeport

activities (Country profile 2005)

To respond to the global competition in these sectors Mauritius has made

extensive use of modern technology to improve its productivity and efficiency

The real growth rates have been around 54 over the past four years and

Mauritius is now classified as a middle-income country and is one of the

healthiest economies in the whole African region (Country profile 2005) The

sugar sector provided the start-up capital for the Export Processing Zones

(EPZ) The rapid rate of growth of investment in the manufacturing sector

(investment grew by over 30 each year from 1983 until the late 1990s in this

sector) that led to the success of the EPZ and the Mauritian economy as a

whole This was made possible by the confidence of entrepreneurs and

foreign investors prevailing in the country at that particular time The private

sector accounts for approximately 70 of total capital formation in Mauritius

Investment rate stood around 27 in the four years ending 1996 peaking to

30 in 1994 (SMIDO 1996)

9

When the government recommended the diversification of the economy with

the creation of Export Processing Zones in the early 1980‟s the EPZ sector

benefits from duty-free and quota free access into European Union markets

granted under the Lomeacute Convention as well as tariff preferences granted

under the General System of Preferences (GSP) by countries such as North

America and Japan The mid 1980s witnessed a textile boom raising per

capita incomes and living standards However the conclusion of the Uruguay

Round (General Agreement on Trade amp Tariffs) implies the loss of guaranteed

markets and preferential access which will result in strong competition in

these respective markets (Country profile 2005)

The new strategy of the industrial sector aims at targeting high quality and

high value added products with a view to restoring the competitiveness of the

goods by applying latest technology to the manufacturing industry and hence

improving the quality of the finished products Limited data is available

regarding the SME sector in Mauritius The current research has observed

that there is little research in the field in SME sector in Mauritius

In view of the importance of foreign investment as a source of sustenance to

economic growth the government of Mauritius has taken a series of policy

measures to encourage its flows into manufacturing offshore banking and

financial services information technology communication and tourism As far

as foreign investors are concerned Mauritius offers itself as an attractive

destination because several positive features such as political stability

10

availability of skilled labour and investment-friendly rules and institutions

(Stone 1997)

With such a promising economy there is virtually no evidence on how to

penetrate the business culture in Mauritius and how culture can affect SMEs

and business opportunities therefore this study will explore and understand

the business environment in Mauritius and the challenges of doing business

there as a foreign investor Currently there is very little research done on

SMEs and culture in Mauritius

13 Mauritius SME Background

Experience shows that attitudes towards small business vary from decade to

the next from country to country Before the industrial revolution all business

was small business but with industrial and commercial expansion of

developed nations small has become medium and medium has become big

business

Business owners and managers have often seen growth as an end in itself

and at time the cry get big or get out has been heard in most nations

(Meredith 2004) For more than two decades SMEs have experienced

favourable growth SME has long been prominent in the countrys economy

and make up a large portion of national economy in terms of output

employment and effective utilisation of regional resources Small and medium

enterprises in Europe make up 998 of all European enterprises provide

66 of its jobs and account for 65 of its business turnover (Meredith 2004)

11

In developing countries SMEs account more than 90 of all enterprises

Over the last five years they have been responsible for more than 80 of job

created (Stone 1997) On the issue of job creation Stone (1997) found that

SMEs create more employment than large enterprises and with a lower

investment per job created SMEs are not usually associated with international

activity but they do in fact play a significant international role and their

importance appears to be increasing Available data on SMEs international

activity are very limited (Stone 1997)

In general terms and depending on the country SMEs contribute between

15 and 50 of exports and between 20 and 80 of SMEs are active

exporters Overall it is estimated that SMEs now contribute between 25 and

35 of world-manufactured exports (UN 2005) Increased exports not only

boost the level of sales and employment but also extend the life cycle of

goods and services

In Mauritius SMEs represent 19 according to a report issued by the

Commonwealth Secretariat entitled a Study of Small Firm export Policies

and Institutions in Mauritius Subsequently these SMEs have developed

gradually and move from their tradition orientated operations to export-led

firms probably due to improvement of technology in the field of communication

and the new economic dimension which prevailed

At this juncture it is important to report that few studies on culture and small

and medium entrepreneurship have been conducted on Sub-Saharan Africa

12

There is a paucity of information and even those scarce studies they do not

cover broad perspectives of the situation of SMEs in Sub-Saharan Africa

Therefore this study builds upon the existing limited body of research

regarding how business cultures contribute to the success or failure of small

and medium entrepreneurs In particular it explores the business culture in

Mauritius and its barriers to penetration for new and foreign small and

medium entrepreneurs

14 Purpose Statement

The purpose of this study was to understand the concept on how to penetrate

an international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

15 Aims and Objectives

To investigate the challenges of national cultural differences in

business in Mauritius

To investigate how to penetrate the business environment for a new

and or foreign business culture especially in Mauritius

To investigate business opportunities for SMEs in Mauritius and how

these can benefit the locals

13

16 Research Question

How can Small and Medium Enterprises penetrate the business culture in

Mauritius

These sub-questions all pertain to SMEs business

o 161 SUB-QUESTIONS

What kind of businesses are operating in Mauritius now

What are their business strategies (marketing brands) etc

What are the necessary mechanisms for establishing business in

Mauritius

What are the business needs of established and starting businesses

What are the mechanisms for potential growth of local business

What are the challenges for doing business in Mauritius

How much of business behaviour is influenced by the national culture

17 The Significance of the Study

The findings of the current study will increase the understanding of cultural

barriers to market penetration for SMEs in Mauritius The study adds

knowledge to the body of literature in this area focusing at further

improvement of understudying of culture and business issues The

study becomes part of the universitys education development in line with its

obligations to the communities and the country This research problem arose

from an information need of a particular client This research therefore will try

to explore the client‟s information need and probably contribute to the wealth

of knowledge

14

18 Definitions

CULTURE Hofstede (1997) defines culture as ldquothe collective programming of

the mind which distinguishes the members of one group or category of people

from anotherrdquo It is the norms beliefs and values common to a society

Culture is about the way people understand their world and make sense of it

It only when this is taken for granted assumptions are challenged that people

realise that they even exist (Hofstede 1997)

ENTERPRISE An enterprise is considered to be any entity engaged in an

economic activity irrespective of its legal form This includes in particular

self-employed persons and family businesses engaged in craft or other

activities and partnerships or associations regularly engaged in an economic

activity (European Commission 2003)

INTERNATIONAL BUSINESS International business consists of transactions

that are devised and carried out across national borders to satisfy the

objectives of individuals and organizations The Primary Types of International

Business Activities Are Importing and Exporting Direct Foreign Investment

(Govindarajan and Gupta 2001)

GLOBALISATION refers to a bdquogrowing economic interdependence among

countries as reflected in the increased cross-boarder flow of three types of

entities goods and services capital and knowhow‟ (Govindarajan and Gupta

2001 4)

15

SMALL AND MEDIUM INTERPRISES (SME) is made up of enterprises

which employ fewer than 250 persons and which have an annual turnover not

exceeding EUR 50 million andor an annual balance sheet total not

exceeding EUR 43 million (European Commission 2003)

In Mauritius an SME has been redefined taking into account the volume of

investment in equipment which was previously one million up to 10 millions

Mauritian Rupees presently to be classified as a small enterprises and with

less than 50 and 200 employees for small and medium scale respectively

(Stone 1997)

16

CHAPTER TWO

LITERATURE REVIEW

The aim of this chapter is to introduce conceptual themes that are important in

order to understand the role of culture in international business The chapter

discusses the context of relationship between culture and international

business practices in small and medium enterprises (SMEs) and the major

challenges they face in the area of globalisation A model adopted from Putz

(2000) forms a framework for articulating the conceptual role that culture has

in international business using Mauritius as a case study

21 Embracing Cultural change in an era of globalization

A significant theoretical issue for international business is the role of culture in

the whole aspect of information transformation Since the landmark study by

Haire et al (1966) and the publication of Industrialism and Industrial Man by

Kerr et al (1960) researchers have continued to search for similarities in

culturally specific beliefs and attitudes in various aspects of work related

attitudes as well as consumption patterns and other behaviours If cultures of

the various communities of the world are indeed converging (Heuer et al

1999) International Business (IB) related practices would likely become

increasingly similar For example standard culture-free business practices

would emerge and inefficiencies and complexities associated with divergent

beliefs and practices in the past era may disappear (Heuer et al 1999)

17

Studies elsewhere suggest that culture gets affected by globalization practices

in the current 21st century Globalization has seen flows of information

technology money and people and is conducted via international

government organizations such as the African Union the North American

Free Trade Agreement (NAFTA) and the European Community global

organizations such as the International Organization for Standardization

(ISO) multinational companies (MNCs) Also includes cross-boarder alliances

in the form of joint ventures international mergers and acquisitions These

interrelationships have enhanced participation in the world economy and

have become a key to domestic economic growth and prosperity (Drucker

1995 153)

Literature suggests that because globalization tends to redistribute economic

rewards in a non-uniform pattern a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) Strong opposition to

globalization usually originates from developing countries that have been

affected by the destabilizing effects of globalisation However in recent years

there have been heated debates in Western economies triggered by

significant loss of professional jobs as a result of offshoring to low wage

countries (Schaeffer 2003)

Workers in manufacturing and farming in advanced economies are becoming

increasingly wary of globalization as their income continues to decline

18

significantly In parallel to the angry protests against globalization the flow of

goods services and investments across national boarders has continued to

fall after the rapid gains of the 1990s The creation of regional trade blocs

such as NAFTA the European Union and the Association of Southeast Asian

Nations have stimulated discussions about creating other trade zones

involving countries in South Asia Africa and other parts of the world

Although it is often assumed that countries belonging to the World Trade

Organization (WTO) have embraced globalization the fact is that the world is

only partially globalized at best (Schaeffer 2003)

Many parts of Central Asia and Eastern Europe including the former

republics of the Soviet Union parts of Latin America Africa and parts of

South Asia have raised heightened scepticism about globalization (Greider

1997) In fact less than 10 of the world‟s population are fully globalized (ie

being active participants in the consumption of global products and services)

(Schaeffer 2003)

According to Guile`n (2001) these trends might indicate that globalization is

being impeded by tendencies towards country-specific modes of economic

development making the convergence of IB-related values and practices

difficult to achieve Hofstede (1980)‟s favourite definition of f ldquoculturerdquo is

precisely that its essence is ldquocollective mental programmingrdquo it is that part of

peoples conditioning that they share with other members of their nation

region or group but not with members of other nations regions or groups

Hofstede (2001) asserts that these mental programs of people around the

19

world do not change rapidly but remain rather consistent over time His

findings tend to suggest that cultural shifts are relative as opposed to

absolute Although clusters of some countries in given geographical locales

(eg Argentina Brazil Chile) might indicate significant culture shifts towards

embracing Anglo values the changes do not diminish the absolute differences

between such countries and those of the Anglo countries (ie US Canada

UK)

According to Hofstede (1980) Examples of differences in mental

programming between members of different nations can be observed all

around us One source of difference is of course language and all that

comes with it but there is much more In Europe British people will form a

neat queue whenever they have to wait not so the French Dutch people will

as a rule greet strangers when they enter a small closed space like a railway

compartment doctor‟s waiting room or lift not so the Belgians Austrians will

wait at a red pedestrian traffic light even when there is no traffic not so with

the Dutch Swiss tend to become very angry when somebody-say a foreigner

makes a mistake in traffic not so with the Swedes All these are part of an

invisible set of mental programs which belongs to these countries‟ national

cultures Such cultural programs are difficult to change unless detaches the

individual from his or her culture Within a nation or a part of it culture

changes only slowly (Hofstede 1980)

20

This is the more so because what is in the minds of the people has also

become crystallized in the institutions namely government legal systems

educational systems industrial relations systems family structures religious

organizations sports clubs settlement patterns literature architecture and

even in scientific theories All these reflect traditions and common ways of

thinking which are rooted in the common culture but may be different for other

cultures (Hofstede 1980)

22 The dynamics of Culture as a Multi-level Multi- layer construct

Multi-level approaches of viewing culture as a multi-level construct that

consists of various levels nested within each other from the most macro level

of a global culture through national cultures organisational cultures group

cultures and cultural values represented the self aspect of the individual See

figure 3

21

Figure 3 The dynamic of top-down-bottom up process across levels of

culture (Source Schein 1992)

The model proposes that culture as multi-layer construct exist at all levels

from global to the individual Changes that take place at the external layer of

behaviour are most likely shared by individuals who belong to the same

cultural background level hence characterising the aggregated unit (Schein

1992)

Top-

Down

Individual

Behaviour

Values

Assumptions

Global Culture

National Culture

Organizational Culture

Group Culture

Bottom

Up

22

Below the global level are nested organizational layers or networks at the

national level with their local cultures varying from one nation or network to

another Further down are local organizations and although all of them share

some common values of their national culture they vary in their local

organizational cultures which are also shaped by the type of industry that

they represent the type of ownership the values of the founders etc Within

each organization are sub-units and groups that share common national and

organizational cultures but differ from each other in their unit culture based on

differences in functions of their leaders‟ values and the professional and

educational level of their members At the bottom of this structure are

individuals who through the process of socialization acquire the cultural values

transmitted to them from higher levels of culture Individuals who belong to the

same group share the same values that differentiate them from other groups

and create a group-level culture through a bottom-up process of aggregation

of shared values (Schein 1992)

Both top-down and bottom-up processes reflect the dynamic nature of culture

and explain how culture at different levels is being shaped and reshaped by

changes that occur at other levels either above it through top-down

processes or below it through bottom-up processes(Schein 1992) Similarly

changes at each level affect lower levels through a top-down process and

upper levels through a bottom-up process of aggregation The changes in

national cultures observed by Inglehart and Baker (2000) could serve as an

23

example for top-down effects of economic growth enhanced by globalization

on a cultural shift from traditional values to modernization

In view of the complexity of the organizational structures specific

organizational structures that have global character need to be established so

as to adopt common rules and procedures in order to have a common

bdquolanguage‟ for communicating across cultural borders (Kostova 1999 Kostova

and Roth 2003 Gupta and Govindarajan 2000)

Given the dominance of Western Multi National Companies (MNCs) the

values that dominate the global context are often based on a free market

economy democracy acceptance and tolerance of diversity respect of

freedom of choice individual rights and openness to change (Gupta and

Govindarajan 2000) The multi-level structure explains how a lower-level

culture is being transformed by top-down effects and that the cultural layer

that changes first is the most external layer of behaviour In the long run

bottom-up processes of shared behaviours and norms would affect the local

organizational culture as well (Schein 1992)

23 International Business and Culture

Knowledge of cultural differences is one of the key components in

international business practices and success Improving levels of cultural

awareness can help companies build international competencies and enable

individuals to become more globally sensitive (Hofstede 2003) Indeed

cultural differences contribute towards different ways people behave in

24

business Research in the field of international management underscores that

the attributes of cultural knowledge used by a firm play an important role in the

firms expansion For example Martin and Salomon (2003) found that cultural

orientation in entrepreneurial action is a central theme and can serve as a

starting point for immigrant business

ldquoUnderstanding the culture and the conceptualisation of culture in conjunction with entrepreneurial action is a critical issue when doing business in an international environment Contributions of economic geography inspired by the cultural turn which shows alternative ways of thinking about the connection between culture and economy by using a new understanding of culture are also critical (pg 198)rdquo

The statement underscores the important of understanding the culture of a

society before attempting to do business there otherwise the company runs a

risk of going out of business The ways in which different groups of people

interpret their environment and organise their activities is based the on the

specific cultural values and assumptions Certain values often thought to be

universal really do differ from culture to culture What constitutes an ethical

business practice is not the same everywhere This can be an enormously

difficult area in managing business across cultures (Straub et al 2002)

Although one may claim cultural differences to be going away they are

actually being absorbed in the business practices This makes it more critical

than ever to try to understand different cultures and their influence on the

ways people do business and view the world The costs of not understanding

are getting greater than ever The essence of culture is not what is visible on

the surface It is the shared views about what people understand and interpret

25

the world These cultural differences are crucial influences on interactions

between people working and managing across culture (Gertler 1997)

The social behaviour of a society is embedded in a particular context and is

connected to other deeply held values and beliefs (Weisinger and Trauth

2003) This means that the stakes are high for mismanaging cultural

differences Ignoring or mishandling differences can result in an inability to

retain and motivate employees a misreading of the potential of cross-border

alliances marketing and advertising blunders and failure to build sustainable

sources for competitive advantage Mismanaging cultural differences can

render otherwise successful managers and organisations ineffective and

frustrated when working across cultures (Weisinger and Trauth 2003)

24 Putz Model For Immigrant Business and Culture

Literature in the field of Immigrant Business differentiates mainly between two

basic approaches each with a different emphasis which are combined to

explain entrepreneurial action of immigrants (Putz 2000) The first approach

emphasis the bdquoopportunities‟ offered by the host country including access to

the market and job market conditions The second approach focuses on the

bdquoresources‟ of migrant groups from whom the concept of culture becomes

essential (see Figure 1 below)The Putz (2000) cultural model below is a

summary of explanatory approaches following the assumption that self

employment of certain groups is the result of their specific cultural

predisposition which favours business activity

According to Putz‟s (2000) view of cultural model the bdquoopportunities‟

approach which refers to market possibilities as an explanation for self

26

employment of immigrants assume that there are certain market segments

with favourable development perspectives especially for immigrant groups

Here two factors receive special attention which are niche markets and legal

and institutional frameworks Niche markets make the establishing of business

by immigrants easier because their needs for consumer goods create specific

demand Legal and institutional frameworks gain awareness in international

comparative studies through restrictions specified by a country regarding

business permits and regulations these frameworks influence both the extend

and the sectored structure of the bdquoimmigrant business‟ (Putz 2000)

According to Putz (2000) the observation that most immigrant groups show a

higher level of self employment rate than others often forms the background

explanation which focus on opportunities created by the host society

Resource models stress the shared characteristics of migrants of same origin

Resources models explain that certain groups have specific cultural

resources which make it easier for members of that group to become self

employed therefore one can distinguish between the cultural traditions and

socialethnic networks ( Putz 2000)

27

Figure 4 Dominating models concept of bdquoImmigrant Business‟ (Source Putz

2000)

OPPORTUNITIES

Market Access

Possibilities

Market Conditions

Niche Markets

lsquoOpenrsquo Markets

Job Market

Conditions

Access

Vertical Mobility

Legal and Institutional

Frameworks

lsquoEthnicrsquo

Business

RESOURCES

lsquoClass Resourcesrsquo lsquoCultural Resourcesrsquo

Cultural

Traditions

Social lsquoEthnicrsquo

Resources

28

When successfully managed differences in culture can lead to innovative

business practices faster and better learning within the organisation and

sustainable sources of competitive advantage (Sondergaard and Hofstede‟s

1994) In relation to that the current study argues that managers need to

study and understand the culture and the niche market before investing This

assumption has been raised as a result of the previously reported experiences

and research findings already reported so far It is therefore critically important

to understand that every society has got its own way of behaving which needs

to be understood if the business is to succeed Operating companies need to

understand what their business means to the people of the given community

and their culture

Several studies of international business have indicated that

internationalization of the firms is a process in which the firms gradually

increase their international involvement(Johanson amp Wiedersheiml 1995

Gibson 1999 Chui et al 2002 ) It seems reasonable to assume that

within the frame of economic and business factors the characteristics of this

process influence the pattern and pace of internationalization of firms Figure

5 below shows a model of the internationalization process of the firm that

focuses on the development of the individual firm and particularly on its

gradual acquisition integration and use of knowledge about foreign markets

and operations and on its successively increasing commitment to foreign

markets The basic assumptions of the model are that lack of such knowledge

is an important obstacle to the development of international operations and

that the necessary knowledge can be acquired mainly through operations

abroad (Johanson and Wiedersheiml1995)

29

FIGURE 5 The Basic Mechanism of Internalisation- State and Change Aspects

Figure 5 Basic Mechanism of Internalisation (Source Johanson amp

Wiedersheiml 1995)

Market knowledge and market commitment are assumed to affect both

commitment decisions and the way current activities are performed These in

turn change knowledge and commitment ( Aharoni 1966) In the model it is

assumed that the firm strives to increase its long-term profit which is

assumed to be equivalent to growth (Williamson 1966) The firm is also

striving to keep risk-taking at a low level These strivings are assumed to

characterize decision-making on all levels of the firm Given these premises

and the state of the economic and business factors which constitute the frame

in which a decision is taken the model assumes that the state of

internationalization affects perceived opportunities and risks which in turn

influence commitment decisions and current activities (Johanson amp

Wiedersheiml 1995)

Market

Knowledge

Market

Commitment

Commitment

Decisions

Current

Activities

30

2 5 The Role Of Information Communication Technologies

Hofstede (2001) observed that not only will cultural diversity among countries

persist but also new technologies might even intensify the cultural differences

between and within countries Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

Information communication technologies (ICTs) enable users to access varied

amounts of information globally however it does not necessarily increase

their capacity to absorb the information at the same rate as the information is

disseminated or diffused (Bhagat et al 2002) In addition information and

knowledge are interpreted through cultural lenses and the transfer or diffusion

of organizational knowledge is not easy to accomplish across cultural

boundaries (Bhagat et al 2002)

Ethnic groups around the world observe the lifestyles and cultural values of

other countries and some are interested in adopting part of the lifestyle and

values but others reject it completely (Kirkman and Shapiro 2000) The

effects of new technologies on improving efficiencies of multinational and

global corporations are well known but it is not known how these new

technologies especially computer-mediated communication and the Internet

31

might create significant shifts in the cultural patterns of different ethnic groups

(Kirkman and Shapiro 2000) or on their ways of doing business

In essence there in need to explore how the spread of ICTs is affecting the

progress of globalization in different parts of the world by incorporating the

role of cultural syndromes organizational cultures and other processes

which has recently been attempted by scholars such as Bhagat et al (2003)

and Gibson and Cohen (2003)

Information and Communications Technology (ICT) has become a catchword

with different interpretations and viewpoints even among experts As the

name suggests ICT encompasses all the technology that facilitates the

processing transfer and exchange of information and communication

services In principle ICTs have always been available since the advent of the

printing press The only difference is that from the late twentieth century rapid

advances in technology changed the traditional ways in which information was

processed communications conducted and services available (Adu 2002)

These technological advances have changed business operations and the

way people communicate They have introduced new efficiencies in old

services as well as numerous new ones One could even imagine going as far

as replacing the term Post-industrial Society with ldquoInformation Society that

is a society where the ability to access search use create and exchange

information is the key for individual and collective well-being (Kaplan 2001)

32

Globally entrepreneurship is considered as the engine of economic

development The SME sector has the potential to address socio-economic

challenges facing both developing and developed countries Without small

business development it is argued that economies stagnate unemployment

levels continue to rise and the general standard of living deteriorates

Information and communications technology (ICT) has been identified as a

major area of need to develop the SME sector in areas of information

provision access to national and international markets and other areas of

business development and support ( Ferrand and Havers 1999)

ICTs enable entrepreneurs to manage their businesses efficiently and thus

enhancing their competitiveness in the global market They can increase their

geographic reach improve efficiency in procurement and production and

improve customer communications and management For these reasons the

need to encourage and accelerate the uptake and optimal application of ICTs

by SMEs in different sectors of the economy cannot be overemphasized

(Ramsay et al 2003) The ICT sector has the potential to absorb prospective

entrepreneurs considering various business opportunities offered by the

sector Some of the business opportunities available within the sector relate to

systems integration application development database administration web

design and internet service provision The sector is also seen as an area with

major opportunities for the historically disadvantaged sectors of the

population It therefore becomes imperative for government to provide

mechanisms to accelerate the entry of SMMEs into the ICT sector (ILO 2001)

33

26 Cross Culture and International Business

Cross-cultural management advice rests on several assumptions in the

tradition of Hofstede (1997) that a) that national culture is comprised of norms

and values that can be readily identified and addressed b) that these norms

values and patterns of behaviour are stable and change at an extremely slow

pace and c) that national culture predominates over organizational culture

epistemic culture gender or other determinants of attitudes and behaviour

According to Hosftede (1997) national culture is comprised of norms and

values that can be readily identified and addressed

Organisational culture (common values and attitudes) affects organizational

success and innovation develops over time and may be difficult to change

ldquoThere is a relationship between an organization‟s culture and its

performance The pervasive nature of organizational culture means that if

change is to be brought about successfully this is likely to involve changes to

culturerdquo (Mullins 1999)

An alternative view sees culture as more complex context-specific and

dynamic For example Weisinger and Trauth (2003) examined the interaction

of national cultures the IT industry culture and a particular firm‟s

organizational culture They observed that the resulting situated culture ldquois

fluid contextually dependent and created by actors within a group who may

hold conflicting assumptions and world viewsrdquo In other words culture is as

what it is because of what it does This means that management must ensure

34

that key capabilities for example marketing analytics or process controls are

developed and nurtured across the organization

Successful global managers recognize that they cannot respond to every

unique opportunity that local settings offer Thus there is an inherent tension

in cultural sensitivity a management team which is ldquotoo sensitiverdquo to cultural

and structural features exposes the organization to the risks that come with a

lack of focus and coherence while managers who do not take cultural and

structural features into account expose the organization to the risks that come

with organizational rigidity (Myres and Tan 2002)

According to Mistry (1999) entrepreneurial networks and clusters in sub-

Saharan Africa have not generally produced the kind of strong transnational

links that characterize Asia‟s flourishing pattern of industrial diffusion The

author states that the reasons for this are complex differences in geography

different models provided by leading countries in the neighbourhood and

policies adopted by governments in the respective regions Chinese business

networks are responsible for some of the information ideas and capital that

helped launch the small Indian Ocean nation of Mauritius as an important

centre for export-oriented industry The Chinese networks in Mauritius also

continue to facilitate a role that Mauritius first began to play in the eighteenth

century they serve as a gateway for overseas Chinese entrepreneurs

interested in investing both in Mauritius and elsewhere in Africa (Mistry 1999)

35

27 Investing in Mauritius

There are a lot of advantages in investing in Mauritius The economy of the

country is stable and the graph of the economy and business is one the rise

for a considerable period of time The Mauritius government has undertaken a

sequence of strategic measures to support its course into offshore banking

manufacturing and financial services communication technology and tourism

keeping in mind the significance of foreign investment as a basis of

nourishment of the financial development (Dabee and Greenaway 2001)

According to Dabee and Greenaway (2001) tthere are various factors that

influence financiers to invest in Mauritius like accessibility of skilled labor

political constancy and venture-friendly institutions and regulations One of

the major factors for the development of Mauritius is the Foreign Direct

Investment (FDI) The government of Mauritius has given all the necessary

support to create the most favorable investment setting by the following steps

Building modern infrastructure

Endorsing suitable legislations

Commencing packages of investment inducements

Investing in human capital

Some of the advantages of investing in Mauritius are as follows

High-quality infrastructure with superb transportation

Democracy and a steady government

Free market financial system fastened on export slanting activities

Excellent system of sea and air transport

36

High standard of living good international schools

A highly educated bilingual and responsive work force

Knowledgeable financial segment providing outstanding services

Constructive market contact and good inducements ( IBP 2002)

Mauritius has various sectors where investment can be made like Information

and Communication Technology and manufacturing For doing business in

Mauritius registered trademark is required The trade marks for business are

issued by the registered Patents and Trademarks sector of Ministry of Foreign

Affairs International Trade and Cooperation In the country of Mauritius a

foreigner is eligible to hold 100 shares In this case one of the directors of

the company has to inhabit in Mauritius and the foreign individual has to

obtain a sanction from the Office of Prime Minister (IBP 2002)

In Mauritius the laws concerning income tax is based on the English law of

income tax The companies in Mauritius are lawfully accountable to pay out

income tax on their profits at an even rate of 25 A company which is

included in the country or has its scheming benefit in the country is measured

for tax reasons to be an occupant corporation To the Mauritius companies

various types of tax incentives are granted The companies that hold

certificate for Tax inducement are responsible to tax at an abridged rate of

15 while the scheduled companies are accountable to pay tax at the rate of

25 ( Dabee and Grrenaway 2001)

37

CHAPTER THREE

METHODOLOGY

Having looked at culture to some depth this chapter explains the methods

used in carrying out the study The study used mixed method approach to

allow for data corroboration and dynamism since the subject in question

needed dynamism and sensitivity in approach

This research mixed both qualitative and quantitative approaches to try and

get best possible research by combining both features because they

complement each other Quantitative data techniques condense data in order

to get a bigger picture whereas qualitative techniques are data enhancers

making it possible to see issues more clearly (Dawson 2002 Neuman 2000)

Attempt was made to keep in line with recommendation made in the Leeds

Declaration proposition number 6 which calls for the application of multiple

methods and perspectives to try and understand social and cultural issues

(Hunter and Lang 1993) Mixing qualitative and quantitative methods also

called positivist and interpretive respectively (Gilbert 2001 and Bowling 2002)

is effective in a complex issue study such as this one because they highlight

different perspectives of the same problem in this case - the public in parallel

with the individual level(Gilbert 2001) This is because quantitative methods

adopt a numerical approach to data collection and analysis to provide macro

level perspective whereas qualitative methods provide micro level perspective

through collecting data from individuals (Ibid)

38

There was also use of impersonal (public) documentation using official

records which were more library based research (Grbich 1999) on top of

theory generating field based methods (Ibid) Many researchers (Bowling

2002 Neuman 2000 Grbich 1999 Denscombe 2003 and Gilbert 2001)

concur that neither of the methods is superior to the other but just different

each having its strengths and weaknesses (Dawson 2002)

The study sought to explore the attitudes behaviour subjective meanings and

experiences of the participants making qualitative approaches best suited

because they emphasize the importance of context (Neuman 2000) However

to generate objective and factual (Maynard and Purvis 1994) statistical

figures quantitative research was more suitable Hence mixing of methods

(Dawson 2002 Denscombe 2003) to counteract weaknesses in both

approaches to give breadth and width to the study (Maynard and Purvis

1994) The flexibility of qualitative research allowed for re-focusing and

refinement of the tool dependent on participants‟ reactions throughout

(Neuman 2000) to pick up any emerging evidence thus applying the

grounded theory approach (Dawson 2002)

39

31 Research Setting

Mauritius is a volcanic island of lagoons and palm-fringed beaches in the

Indian Ocean Southern Africa east of Madagascar with a population of

about 12 million has a reputation for stability and racial harmony among its

mixed population of Asians Europeans and Africans The island has

maintained one of the developing worlds most successful democracies and

has enjoyed years of constitutional order since independence in1968 Over

the past three and half decades the country has been transformed from one

of the poorest in the world to a middle income country with per capita Gross

Domestic Product US $7000 (World Bank 2006) It has preserved its image

as one of Africas few social and economic success countries that mainly

depends on sugar and clothing export and a centre for upmarket tourism But

Mauritian exports have been hit by strong competition from low-cost textile

producers and the loss of sugar subsidies from Europe Consequently

attention has turned to diversification in line with global trends

To this end SMEs have been identified as important instruments to achieve

economic diversification Today the government vigorously supports SMEs

through a range of strategies eg the creation of a business friendly climate

via import liberalisation tax reforms and the launch of the SME Partnership

fund which gives subsidized loans to aspirant SME owners and makes the

availability of finance and facilitating access in particular for those enterprises

that have viable projects but are short of equity The Small Enterprises amp

Handicraft Development Authority (SEHDA) was created following the merger

of the Small amp Medium industries Development Organisation (SMIDO) and the

National Handicraft Promotion Agency (NHPA) The aim of the merger is to

40

rationalize and optimize the use of resources dedicated to the small business

sector in Mauritius

Various cultures and traditions flourish in peace though Mauritian Creoles

descendants of African slaves who make up a third of the population live in

poverty and complain of discrimination Mauritius was uninhabited when the

Dutch took possession in 1598 Abandoned in 1710 it was taken over by the

French in 1715 and seized by the British in 1810 The culture of the country

reflects its diverse ethnic composition There are many religious festivals

some important ones being (in random order) Divali (the hindu festival of

lights in October) Christmas Cavadee (a penitence festival of the south

Indian tradition of hinduism in January) Eid ul Fitr (celebrating the end of the

period of fasting in Islam As the Islamic calendar does not correspond to the

Gregorian calendar the date of its celebration in the year tends to vary In

2003 it was celebrated in November) With such a strong history diverse

culture and such a promising economy painted above makes Mauritius a rich

setting to investigate culture and small medium business entrepreneurship

32 Methods

As justified already this study applied method mix to exploit the benefits of all

methods used while minimising the effects of their weaknesses The obvious

benefit of method mix is that it involves more data which is likely to improve

the quality of research (Denscombe 2003) and that is what the researcher

sought to achieve In deciding which method to use it was acknowledged that

the chosen methods were not superior in any way but more suited to the study

41

circumstances based on the premise of ldquohorses for courses (Denscombe

2003 page 83)

A Questionnaire used in the online web survey allowed for collection of

data from large numbers of participants economically since the project had

financial and time limitations (Ibid) The other advantage of survey exploited is

generation of quantitative data However weaknesses of the method

(empiricism lack of depth and accuracy of responses) were a challenge The

questionnaire was open ended and was completed by the participant in the

absence of the researcher Any questions arising from the participant not

understanding or misinterpreting the question where not taken care of Focus

groups were used to gain depth into some of the emerging issues from

questionnaires to gain insights into the issues surrounding widow inheritance

and to validate some of the data (Denscombe 2003) Telephone and face to

face interviews were used to gather to gain in-depth information on the

issues

All accessible literature on culture and investment in Mauritius as well as

other parts of Africa was reviewed to get insight into any related work to

identify key issues and current knowledge gap so as to sign post this study for

any audience (Ibid)

42

33 Research Participants and sampling

It was difficult to get exact demographic data for each sector Consequently it

was not possible to use any scientific sampling techniques The study

therefore used non-probability sampling (Neuman 2002 Bowling 2002

Denscombe 2003) targeting urban based population

The sample baseline characteristics were

SME managers from aged 18 years and above and over 65 was the

limit Any religion faith Any socio-economic background and residents

of Port Luis and surrounding areas

To sample for quantitative data purposive and snowballing sampling

techniques were used because it was not possible to apply any statistical

formula in getting the samples since there was no single list of SME managers

and other stakeholders to use with any form of probability sampling

Participants were snowballed from one sector to another until the whole

sectors were covered For the focus groups homogenous and critical case

(Grbich 1999) sampling was used to get particular sub group to provide

details In this case to get government officials and the private sector who

were strong enough to talk about their experiences

A total of 161 participants were reached from all the sectors These included

SME manager government officials and the private sector The researcher

wishes to point out that these numbers were not conclusive The numbers

could be much higher because in case the researcher phoned the participants

they were not available to take the call there was no time to go back to

43

ascertain the details Those who were not willing to take part in the study were

also excluded from the above figures For the focus groups discussions 5

government officials and the private widows were invited and used Skype

technology to do a conference

The times when the participants were contacted met were entirely dependent

on participant availability and other events at the time (Gilbert 2001) It varied

between 800 am and 700 pm in the evening because of the time differences

UK and Mauritius time Care was taken to avoid compromising times such as

late in the evening or culturally sensitive days such as weekends when people

were engaged in funerals and church services in this case

The participants showed weariness towards the study because as they put it

ldquoa lot of people come along claiming to collect data to help but never show up

againrdquo

34 Data collection Instruments

The researcher developed an online quantitative data collection questionnaire

(web survey form) which was posted on the university web server with help of

the department technicians A multiple recipient list was created from the

details in the SEHDA website and was randomly sent to the recipients These

only included the SME managers from the seven sectors About 20 contacts

were selected from each sector which made a total of 140 participants

Telephone interviews were made to about 17 government officials and the

private sector who were later divide n to focus groups and a teleconferencing

44

was organised on Skype Face to face interviews were done with government

officials from the Mauritian High Commission in the UK

Apart from the questionnaire an Olympus VN 2100 PC Digital Voice Recorder

was also used during the focus group discussion with the permission of

participants also on telephone interviews and face to face interviews This

was tested set and correctly positioned by the telephone speaker before the

session began to ensure proper functioning It was fitted with a mini

microphone to improve recording quality The digital voice recorder small in

size (only 68 grams in weight) proved user friendly because it was not

intruding too much into the face of participants as opposed to older recording

devices There was a pair of AAA batteries on standby in case the batteries in

use ran flat during the session

35 Ethical Considerations

This study involved very little of sensitive issues but it strived very much to

adhere to the fundamental principles of Human Research Ethics of Respect

for Persons Beneficence and Justice The researcher ensured autonomy self

determination and protection of vulnerable persons through informed consent

participation confidentiality and thorough explanation of what the research

was all about to those with limited knowledge and education Any risk that

might have resulted from the study was minimised as much as practically

possible and the researcher took full responsibility for the protection of

participants There was no form of discrimination other than on participant

baseline characteristics

45

The study also upheld the six key ethical research principles as stipulated by

ESRC - UK (ESRC 2005) To ensure anonymity pseudonyms were used for

participants The information gathered was safely protected through password

use on the computer system and only the researcher had access to the

information The researcher was responsible for storage and destruction of

any information no longer needed such as audio files after transcription

Research respondents participated in a voluntary way free from any coercion

and free to withdraw at any point should they felt uncomfortable

The first ethical committee whose approval was sought was the University of

Sheffield Ethical committee after which the researcher sought ethical approval

from Mauritian authorities through the relevant ministries It was not straight

forward getting ethical approvals in Mauritian but ultimately the ministry of

SMEs approval was obtained

36 Procedure

After all the necessary approvals were obtained the researcher wrote an

explanatory letter (Grbich 1999) or bdquoparticipant‟s information sheet‟ (appendix

5) which included information on informed consent (Denscombe 2003)

After piloting the tools the researcher started by making calls to make

appointment for interviews As the quantitative data collection went on

recruitment of participants to take part in qualitative aspect was done

simultaneously due to time constraints The researcher used individual

judgement to asses those participants who would be courageous enough to

respond to the questionnaire online and to the interviews The managing

46

director for RCBusiness Support Ltd also provided a number of potential

respondents who were used at the initial stages of the study Each interview

session lasted averagely 50 minutes The researcher went to organise the

teleconferencing for the focus group on Skype which also lasted for average

50 minutes

37 Data Analysis

Since the distinction between quantitative and qualitative research is not

watertight (Denscombe 2003) data analysis embraced both because they

have similarities and differences (Neuman 2000) There was analysis of

words and numbers thus holistic versus specific focus (Denscombe 2003)

The analysis adopted a five stages approach (Denscombe 2007) The first

stage was data preparation followed by data exploration analysis

presentation and finally validation

Though some researchers champion for advanced inferential statistics

(Denscombe 2007) the researcher opted for descriptive statistics for the

quantitative data analysis because they still remain effective ways of data

analysis and presentation (ibid) The research data involved nominal as well

as discrete and continuous data which could effectively be analysed using the

chosen method The data was grouped frequencies were described and

finally any linkages were identified The end product of the analysis process

is presented in the results section in various formats Basic statistical

techniques were used to give the data additional credibility in terms of

interpretations of the findings (Denscombe 2007)

47

For the qualitative data the first thing was to back up the original voice

recorded focus group discussion into a password protected lap top This

ensured not only the security of the data but also a back up in case of data

loss The researcher then listened to the recording several times to familiarise

himself with the data after which transcription took place After that the data

was interpreted and categories themes were identified since thematic

analysis was employed The Putz (2000) model was used as a guide to

finding themes The findings are presented in the results section

38 Planned programme of dissemination

The study findings were disseminated to all relevant stakeholders in print

format including the university as part of the postgraduate degree requirement

in academically fulfilling format Two copies of the report were sent to the

Ministry of SMEs in Mauritius and two copies to the Board of Investment of

Mauritius in the UK as part of the requirements of ethical approval and

research permission granted by the ministry

Finally it was hoped that the report would meet publication requirements so

that it could get a wider audience through a reputable journal

48

39 Time scale

The study was anticipated to take the following breakdown from the time all

ethical approvals and consent were obtained

Table 1 Table showing the study time scale

Stage Time allocation Action item Accountable person

I Weeks 1 - 3 Research set up Sampling and

access to participant negotiations

Angelinah Boniface

II Weeks 4 - 12 Data collection and Analysis Angelinah Boniface

III Weeks 12 - 16 Analysis Report writing and

dissemination

Angelinah Boniface

310 Limitations and Delimitations

This study was not fully funded as such high telephone costs travelling

affected the exercise Only business people in Mauritius both men and women

were interviewed The study covered both local and foreign investors

Participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

49

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

A major limitation is a low response rate of the questionnaire and therefore a

representative sample of the SME population was not achieved Thus any

conclusions made from the analysis of the collected data cannot be

generalized to the broader SME population Bias may have been inadvertently

introduced during interviewing caused from such things as leading questions

50

CHAPTER 4

RESEARCH FINDINGS AND DISCUSSION This chapter aims to discus the research findings from the study The chapter

is divided into two sections the first part presents and discusses the

quantitative data and the second part discusses qualitative It is therefore

worth mentioning that the Putz (2000) model was used to guide the

qualitative data analysis and some of the themes were taken from the model

and some were generated from the research findings It must be noted that

any findings uncovered from this study cannot be generalized to the broad

public domain regarding SMEs

Section A of the questionnaire and the interview guide included questions that

collected background information on the SME managers and the responding

firms These data constitute the substantive material for analysis in the

ensuing sections The tables below depict the socio demographic

characteristics of the survey participants age group gender educational level

and experience as ownermanager In the following sections there aspects

are discussed

51

41 RESPONDENTS RATE ACCORDING TO SECTORS

TABLE 2

SECTOR SEHDAS SURVEY SENT

SURVEY RECEIVED

RESPONSE RATE

Leather and Garments

1678 20 12 60

Wood and Furniture

2196 20 11 55

Paper Products and Printing

1541 20 9 45

Chemical Rubber and Plastic

1376 20 11 55

Pottery and Ceramic

793 20

17 85

Jewellery and Related Items

1674 20 13 65

Fabricated Metal Products

1267 20 14 70

TOTAL 7 140 101 72

Table 2 shows the response rates from various sectors of SME in Mauritius

which were targeted by the online survey As the table indicates pottery and

ceramic sub sector had the highest response rate (85) with paper products

sector giving the least response rate (45) Overall 72 response rate from

all the targeted sectors was satisfactory It is worth mentioning that the total

number of participants adds to 140 since this question was only directed to

sectors not to other stakeholder in the research sample

52

42 DEMOGRAPHIC PROFILE PARTICIPANTS

TABLE 3 AGE GROUP AS PER PARTICPANT

AGE GROUP FREQUENCY PERCENTAGE

-25 7 43

26-35 34 211

36-45 53 329

46-55 35 217

56-65 22 137

gt 65 11 63

TOTAL 161 100

Evidence from most of entrepreneurial literature suggests that self-

employment becomes an increasingly attractive option as one nears middle

ages As can be seen in table 3 respondent‟s ages ranged from 25 to 65 and

the largest proportion (329) of the participants was in the age range of 36ndash

45 Additionally participants were biased towards the age ranges of between

36 and 65 and away from the under 25 and over 65

TABLE 4 GENDER PROFILE AS PER PARTICIPANT

GENDER

Male 116 720

Female 45 280

TOTAL 161 100

53

In relation to gender the research sample was predominantly male (72) a

striking although unsurprising demographic characteristic that reflects the

composition of the larger business sector in the country as a whole

Consequently only (28) were females This is clearly illustrated in table 4

above

TABLE 5 EDUCATION PROFILE AS PER PARTICIPANT

EDUCATIONAL LEVEL

Primary 8 50

Junior-level 29 180

O-level 78 484

Diploma 34 211

Higher Degrees 12 75

TOTAL 161 100

As evident from table 5 the educational levels attained by respondents varied

considerably as follows Primary School Certificate (8 or 5) Junior

Certificate (29 or 180) Ordinary Level (78 or 484) Diploma (34 or

211) and higher Degrees (12 or 75 ) On the whole though the data

suggest that the educational levels of our respondents are low the largest

proportion (398) possessing an Ordinary Level certificate

54

TABLE 6 YEARS EMPLOYED AS CEO AS PER PARTICIPANT

Years Of Employed as CEO

0-3 44 273

4-7 88 546

8-14 15 94

15-19 11 68

Over 20years 3 19

TOTAL 161 100

Not surprisingly table 6 shows that most of the responding executives did not

have education that emphasized a business curriculum This can be

understood with respect to the Mauritian educational curriculum which largely

overlooked business subjects until very recently

The research sample participants had been employed at their current firms on

average 1467 years and had an average of 12 years experience in the

manufacturing industry Four predominant job titles used by the senior

executives emerged from the questionnaireinterview responses Managing

Director (38) Director (26) Manager (20) and Chief Executive Officer

(16)

55

43 CHARACTERISTICS OF RESPONDING FIRMS

This section presents the descriptive statistics of the responding firms The

description focuses on age of the firm employment size firm revenues and

firm ownership

TABLE 7 COMPANY AGE PROFILE

Age of Company Frequency Percentage

1- 3 years 44 314

4- 6 years 68 486

7-10 years 19 136

11-15 years 7 50

Above 15 years 2 14

TOTAL 140 100

Table 7 displays the statistical data Of the firms responding the largest

proportion (486) was 4 to 6 years old Overall the sample reveals a skewed

distribution towards the ranges between 4 and 15 Also it is interesting to note

that 915 of the responding firms are mature that is beyond the start-up

phase

TABLE 8 EMPLOYEE PROFILE AS PER PARTICIPANT

Number of Employees

50-99 101 721

100-200 39 279

TOTAL 140 100

56

Unsurprisingly the vast majority of the responding businesses had fewer than

100 employees as depicted n table 8 with the largest proportion (701) in

the 50ndash99 employee categories The study found out that most small

companies would opt to have family and relatives as employees to minimise

costs Only 32 average of the firms were medium-size The preponderance

of small firms in the sample mirrors a more general pattern of firm distribution

in the country where medium and large firms are a conspicuous small

minority

TABLE 9 ANNUAL SALES AS PER COMPANY

Annual Sales

Less than R100 000 88 629

R101 000- R250 000 36 257

R251 000- R15 million 11 79

Above 15 million 5 35

Total 140 1000

As shown in table 9 the largest proportion of responding firms 88or 629

achieved a turnover below R10000000Only scant 11 or 79 posted annual

revenue in excess of R15 million

57

TABLE 10 OWNERSHIP AS PER PARTICIPANT

Ownership

Wholly Citizen 76 550

Joint Venture 42 293

Foreign Owned 22 157

TOTAL 140 100

Regarding ownership table 10 shows that an overwhelming majority or 550

of firms were wholly citizen-owned while the remaining 293and 157

were joint venture with citizen stake and foreign-owned respectively

44 Language

From most of the participants investors do not have to learn Local Mauritius

language since English and French are the official languages in the country

Since most of the investors to Mauritius are either English or French speaking

language as such is not a barrier to business practices and success for

prospective investors

ldquohellipwell it is not very important for foreign investors to learn languages

spoken in Mauritius because we can speak both English and Frenchrdquo

[Participant A5]

ldquohellipactually language is not barrier to English or French speaking investorsrdquo

[Participant A21]

58

Language is perhaps the most complex and perplexing aspect of the

Mauritian social mosaic (Rassool 1996) Contrary to the results that show that

language is not a problem for investors since most of the investors who come

to Mauritius are English or French speakers who normally fits well in the

society since these are the two official languages

This intricacy derives from the number of languages spoken combined with

the uses to which they are put and the socio-political connotations they bear

Baker and Stein (1977) scholars studying language use in Mauritius have

found that English is associated with knowledge French with culture

Creole with egalitarianism and other languages ancestral heritage

Consequently although Creole is the most widely spoken language in the

country French predominates in the media and English is the official

language of government and school instruction (Stein and Baker 1977)

According to the 1983 census the top five languages were Creole 541

Bhojpuri 204 Hindi 115 percen French 37 and Tamil 37 These

figures indicate the principal language used in the home Most Mauritians

however speak several languages

Literature suggests that global organizational structures need to adopt

common rules and procedures in order to have a common bdquolanguage‟ for

communicating across cultural borders (Kostova 1999 Kostova and Roth

2003 Gupta and Govindarajan 2000) This is directly reflected by the results

above that foreign investors need not to learn the local language of locals but

its important to create a common language within the organisation that is

59

understood by all stakeholders in the organisation for effective and efficient

communication

45 Religion

The study found that main religions in Mauritius are Hindu Muslim and

Christianity to a lesser extent Hindus make up approximately half of

religiously affiliated Mauritians Of the remaining Mauritians approximately a

third are Christians and about 15 Muslim followed by small Buddhist and

Sikh communities It is therefore imperative that a foreign investor considers

religion of the people of Mauritius before setting up a business Religion

The study also found out that various religions found on Mauritius tend to play

a major part in the islands cultural events and churches temples and

mosques are to be found everywhere Hindu and Tamil celebrations are part

of Mauritian cultural life

ldquohellipFestivals such as Divali (the festival of lights) Holi (in which participants

are covered in colourful powders) and Thai Poosam in which Tamil devotees

pierce their bodies with masses of needles as an act of penance are

popularly attended by Mauritianshelliprdquo [Participant A60]

ldquohelliphellipthere are also a number of diverse practices and superstitions

originating in beliefs brought from Africa and Asia Local sorcerers known as

longanistes or traiteurs are sometimes called in to settle arguments exact

revenge or administer love potionshelliphelliprdquo [Participant B41]

60

However all communities live together in harmony with each other regardless

of religion the study learnt

hellipHarmonious separatism is how we characterise our communal relations

in Mauritiushellip [Participant A13]

Since all citizens are ldquodescendants of slavery there are no tribes unlike

other African countries This has made integration and assimilation easier and

it makes it very easy for any SME to adapt to the local conditions due to pre

existing harmonyrdquohellip [Participant A13]

It is worth noting that businesses remain closed in public religious days but

the purchasing power remains the same regardless of whether it‟s a public

holiday or not

ldquohellipthe demand is not dependent on whether itrsquos a holiday or nothelliprdquo

[Participant A11]

ldquohellipit doesnrsquot matter really whether its holiday or religious holidayhelliprdquo

[Participant A21]

According to Stein and Baker (1977) the Mauritian society is noteworthy for

its high degree of religious tolerance Mauritians often share in the

observances of religious groups other than their own In part as a result of the

multiplicity of religions Mauritius has more than twenty national holidays In

addition the government grants subsidies to all major religious groups

61

according to their membership (Stein and Baker 1977)This is also evident

from the results of the research

Ethnicity religion and language have been important factors in shaping the

way Mauritians relate to each other in the political and social spheres Despite

the fact that sectarian factors are less of a determining factor in peoples

social and political behaviour they remain an important clue to the peoples

past and self-identity (Rassool 2001) As a foreign investor understanding

the religious belies of a society and taking all the necessary details in to

consideration play a major role in an international business environment

setting (Hosftede 1980) For example observing religious holiday and making

sure employees get days off and annual leaves on such important days

having prayer rooms for those willing to pray at work and creating a non-

discriminatory environment for all employees

It is worth mentioning that while religion does not have a direct impact on

Mauritius investment since it an international business hub However it is

important for investors to take note of all the aspects of religion since it plays a

very important role in lives of the Mauritians For example there are religious

holidays as an employer it is important to follow the religious holiday calendar

and give annual leaves to employees on such important days

46 Social Life

For the interest of prospective investors the study found that the social life in

Mauritius is very much close to families and friends People all meet at open

markets for normal shopping and socialise over weekends ldquoeven ministers

62

managing directors of big companies go to open marketsrdquo [Participant

A12]

There is no busy night life in the country as well as cinema and theatres

because most people prefer home video entertainment ldquoMost people found at

social places like cinemas pubs clubs etc are employees and not

employersrdquohelliphellip [Participant A12] Prospective investors should therefore

know that they are likely to meet business associates at board rooms or at

their offices rather than at social centres

In a society where tolerance is a national virtue and ethnic conflicts are

invisible to the casual visitor it takes time to learn the dos and donts of

socialising ldquohelliphere in Mauritius you must realize that we walk on eggs

continuouslyhelliprdquo [Participant B36] For a peaceful and tolerant as Mauritius

undoubtedly is the diverse groups populating the island do not collectively

make up a nation Mauritius like any other island is a nation of nations and

compromise is the order of the day be it in politics in the economy in the

media or at a dinner party the study found

The study found out that unlike other African societies Mauritius people would

prefer to stay at home and watch movies play video games with kids or visit

friends and relatives to socialise or for a night out There are not many social

night clubs in Mauritius as compared to the United Kingdom ldquohellipmany homes

today have a Digital Video Decoders (DVD) sets and donrsquot see the importance

of going out to cinemas and would helliphelliphelliprdquo [Participant A12]

63

This does not come as a surprise since literature suggests that Mauritius

though it is multicultural society and an international hub for business there

are a quiet peaceful and tolerant nation and would prefer to keep their space

(Stein and Baker 1977)

47 Market Accessibility

The study found that as first foreign investor Mauritius government has open

market programme When the free operational zone initiative began investors

imported raw materials imported duty free and foreign companies had to

show transformation of raw materials into fished exports since the

government‟s aim was to increase exports thus improve balance of trade

However in the early stages the initiative did not work as expected because

of certain barriers

Lack of adequate government incentives to lure more investors

Too much repetition meaning most of the companies where doing the

same thing

Lack of skilled human resources

The scenario is summarised by participant B3 in the following

statementldquohelliphellipour people did not have culture of businessrdquo

For more access to the markets further initiatives were put into place The

government assured investors of freedom of capital movement that is the

investors were guaranteed that they would bring their money into and out of

the country whenever they felt like doing so In addition the government

64

embarked on providing more facilities (industrial buildings) and infrastructures

all over the country opening up rural areas because towns already had

infrastructures Lastly first time investors were provided with free access to

customs thus maintaining the earlier option of tax free imports

While Mauritius was doing all these events elsewhere in the world played to

their favour European Union and USA were imposing import quotas on

Chinese and Indian imports to prevent damping So these investors had to

look for alternative markets and Mauritius turned out to be one of such

markets But the government had to act quickly to avoid bdquotransit investors‟

ldquohellipthey are investors who want to do business when it favours them but when

they begin to loose certain privileges or profits get diminished then they take

offrdquohelliphellip [Participant B3]

To avoid this foreign investors were made to transfer skills and knowledge to

local community which led to emergence of Mauritius community of

manufacturing

ldquowho started from easy stitching like socks pyjamas bras etc and later

upgraded to big Mauritius labelshelliprdquo [Participant B3]

The study further found that the initiative did not stop there The government

further established Mauritius Enterprise Development Investment Authority

(MEDIA) in 1985 which took lead in looking for prospective investors from

65

Europe USA Hong Kong and India among others Any willing investor was

transported to Mauritius and accommodated freely on government accounts to

tour the country and carry out investment feasibility studies This helped to

popularise the investment opportunities in Mauritius and attracted many more

investors Currently MEDIA has been transformed into Mauritius Board of

Investment which is no longer in charge of managing industries but

ldquopromotes Mauritius businesses abroad and participates in trade fairs to

further open uprdquo [participant B3]

The study also found out that there are specific niche markets for foreign

investment in Mauritius namely the Offshore Industry the Financial Industry

the Construction and Tourism especially in the area of high class luxury

property market in form of villas hotels and apartments and of recent the

Information Technology (IT) industry These industries cover a large spectrum

including SMEs

ldquohellipone of these sectors makes a very good investment for any investor

especially the construction industryhelliprdquo [Participant A89]

The results agree with Putz (2000) which notes that niche markets make

establishing a business by immigrants easier because the immigrants needs

for consumer goods create a specific demand This is evidence by all the

incentive the Mauritian government have put in order to attract foreign

investors in to country for the benefit of the Mauritian population Furthermore

Putz (2000) emphasise the opportunities offered by the host country including

66

access to the market and job market conditions as important factors for

international business

48 The role of ICT to SME business in Mauritius

The study found that Mauritius has a very well established ICT sector It has

formed the backbone of SME success in Mauritius As early as 1990 the

country provided hellip ldquothe fastest broadband in the world to help SME business

investors who were each allocated free 2MB internet accessrdquohellip[Participant

A 23] Recently the government has in turn invested a lot of money in

developing a cyber city a few kilometres away from the capital Port Louis

which will form the hub for future investments

This high level of ICT development in the country has created SME in areas

such as offshore financial services calls centres and enhanced tourism

industry growth Any prospective investors are guaranteed of highly

developed ICT backed up by highly qualified local human resources The

offshore investment sector has even been further boosted byhellipldquobilateral

agreements with India allowing companies registered in Mauritius to transfer

funds to India tax freerdquohellip[participant B13]

It is hoped that in helliprdquo5 years time the whole island will have free wifi

connectivityrdquo participant B33 The country not only makes use of its advanced

ICT sector but has become a big player in the region as well For example

Mauritius state informatics computerised South African government in 1996 It

has also won other computerisation contracts in Zambia Zimbabwe Namibia

Kenya and Ghana To sustain such success ldquopartnerships have been formed

67

with global players such as Microsoft to provide training not just to Mauritius

nationals but other scholars from the South Eastern Africa region as

wellrdquohellip[participant B13]As matter of fact the government of Mauritius has

invested billions in building s cyber-city a few miles aware from the capital

Port Louis

ldquoits opening in July this year and it is expected to be the centre of attraction

for investorsrdquo [Participant B13]

ldquoactually the government invested in this cyber-city with the intention to

attract European and American investorsrdquo [Participant A6]

From these results there is evidence that technology plays a major role in

SME development Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

68

48 Governance and the role of women in SME sector

in Mauritius

Mauritius is a multicultural country with ldquo70 of the population of Chinese

Indian ancestry 2 white French origin and the remaining mixed race ndash

creolesrdquo [participant A17] Europe has not have a lot if cultural influence on the

country and predominant cultures are Asian African cultures Study found

that common folklore popular songs in Mauritius would also be ordinary

found on other African countries such as Senegal Mozambique Cameroon

and Sierra Leone among others signifying deep rooted African traditions

The government maintains ndash discrimination laws for either gender In the early

stages of SME development women provided the bulk of the labour in the

rural areas as industries moved away from cities into the rural areas There

are concerted efforts to get women into jobs especially leadership roles

ldquowomen themselves are too slow to act and take advantage of the

government incentivesrdquo

The study found out that woman in Mauritius do not occupy positions of

strategic power decision making This is not a surprise because it is the same

with most Southern African countries The government of Mauritius has put a

lot of structures to support women in business but women are taking it slow to

utilize these structures

69

There are many government agencies and organizations headed by women

and even cabinet posts but most women would rather stay out of politics

becausehelliphellipldquopolitics can get very dirty involving personal lives of politicians

which men donrsquot mind but women do mind a lot aboutrdquohellip[participant A 17)

However in other sectors like education and healthcare there are many

women represented in the labour force

The study also found out that just like any other society one can not ldquohellipstop

some kind of abuse for both males and females There are cases of both

female and male harassment but the law comes in to protect such victims

There are also cases of petty crime and rape involving women either as

perpetrators or victimsrdquohellip [Participant A13]

According to AllAfrica Global Media (2008) the winds of change are blowing

across the island of Mauritius and many men in this traditionally conservative

nation are working hand in hand with women to see that the common sense of

gender equality prevails The absence of women at the decision-making table

usually means the absence of their priorities and needs Irrespective of the

Southern African Develoment Community (SADC) Declaration there are so

few women in politics This is evident from the results of the study which found

that women will rather do health jobs and education than to play the dirty

tricks of politics

Women councillors make up a mere 37 in the Moka-Flacq District Council

This is the lowest figure not only in Mauritius but also in the SADC region

70

This is far from the 2005 30 target not to mention the 50 goal now being

set for the region and included the draft Protocol on Gender and Development

up for review at the August SADC Heads of State Summit ( AllAfrica Global

Media 2008)The results found out that there is also a few representations of

women in business Women do mostly the dirty jobs of caring for children and

their families and do not have the courage to enter the business sector This is

not surprising especially in the SADC region women play the minority role

and are rarely represented at the strategic decision making level hence their

needs are always neglected resulting in women poverty

49 Challenges faced by the country and hence SME investors

Stiff competition from other countries such ashelliphellipldquoBotswana Vietnam and

South East Asia in the textile industry due to cheap labour Maldives and the

Caribbean Islands for tourism difficult in Training enough qualified personnel

in ICT to cope with demand International competition and access to fundsrdquo

hellip[participant B13]

To face these challenges the study found that the country has expanded

tertiary education and formed partnerships with foreign universities such as

ldquoFrench Scientific University which has been running Medical school in

Mauritius for 10 years By the time of this study an agreement had been

reached by Thames valley university (UK) to open up campus in

Mauritiusrdquohellip[participant B15] The aim of the government is to offer high

quality education to students from the region as well as far away like China at

affordable cost and to compete with European universities Further to

71

educational development the study also found out that the country is striving

to create partnerships with ldquoresearch organisations and to create high quality

healthcare so as to benefit from health tourism where would just travel to the

country to get affordable high quality specialised health carerdquohelliphellip [Participant

A3]

Finally results show that there is stiff competition from different sectors of

business and other force which needs to be taken into consideration when

doing business internationally Globalization tends to redistribute economic

rewards in a non-uniform manner a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) It essential to know all

the factors surrounding the business sector and understanding all the

business practices before investing to avoid any loss

72

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

Research on culture and IB is definitely a bdquogrowth‟ area because the business

world is in many ways becoming one The researcher concluded the following

based on study findings

Firstly the cultural diversity and harmony of the island make Mauritius a

unique place in the world It is also known for its social peace political stability

and racial harmony Its steady economic growth over the years coupled with

its nation‟s social cohesion and prosperity ensure continuing development

Secondly Mauritius enjoys a literacy rate over 80 percent Skilled labour

graduates and qualified professional including lawyers engineers IT

programmers consultants accountants and chartered secretaries are

available to suit virtually all business needs in two international languages

English and French Language is therefore not a barrier to foreign investment

In addition academic training at the University of Mauritius and the newly

established University of Technology a comprehensive system of vocational

training through the Industrial and Vocational Training Board (IVTB) ensures a

ready supply of skills in a number of fields such as tourism engineering

electronics jewellery ICT printing and textiles

Thirdly In view of the importance of foreign investment as a source of

sustenance to economic growth the government of Mauritius has taken a

series of policy measures to encourage its flows into manufacturing offshore

73

banking and financial services information technology communication and

tourism As far as foreign investors are concerned Mauritius offers itself as an

attractive destination because several positive features such as political

stability availability of skilled labour and investment-friendly rules and

institutions

Fourthly after a sustained growth path over the last three decades based on

sugar textiles and tourism Mauritius is now shifting gears to move towards a

higher stage of economic development so as to consolidate its position as a

premier international hub Foreign Direct Investment (FDI) has played an

important role in the development of Mauritius and will again be decisive when

the country embarks on high value-added capital intensive and knowledge-

based activities

Fifthly the government plays the role of a facilitator and has endeavoured at

all times to create the most conducive investment environment by enacting

appropriate legislations building state-of-the-art infrastructure investing in

human capital and introducing packages of investment incentives for the

manufacturing financial services and ICT sectors so as to enhance the image

of Mauritius

In this respect the Board of Investment (BOI) is the first contact point for

anyone investing in Mauritius Operating under the aegis of the Ministry of

Finance the BOI was established in March 2001 under the Investment

74

Promotion Act to give a new impetus to foreign direct investment The BOI is

the apex organization for the promotion and facilitation of investment in

Mauritius The primary role of BOI is to stimulate the development expansion

and growth of the economy by promoting Mauritius as a competing business

and service centre It aims at streamlining the legal framework and to make

better provision for the promotion and facilitation of investments in Mauritius It

acts as a facilitator and provides a one-stop shop service to both local and

foreign investors ensuring reliable and speedy processing of applications The

BOI receives processes and approves all applications for investing in

Mauritius It also assists investors in obtaining the necessary secondary

permits and clearances from relevant authorities thus ensuring a speedy

implementation project

Six Mauritius pursues a liberal investment policy and actively encourages

foreign direct investment in all sectors of the economy Attractive packages of

both fiscal and non-fiscal incentives tailor-made to the needs of each priority

area of development are offered to investors Excellent opportunities for

investment in Mauritius exist in various sectors of the economy including

manufacturing information technology knowledge industry regional

headquarters tourism and leisure financial services Freeport activities

amongst other sectors Some of the priority areas are in Information and

Communication Technology which is set to a play a lead role in the economic

development of the country in the medium and long terms The availability of

high bandwidth connectivity (with SAFE Project and international Gateways)

at near global parity in quality and tariff on the one hand and the setting up of

75

dedicated IT habitats including the Cyber city at Ebeacutene on the other hand

plus total Government support to this industry are testimony of the importance

of this industry to Mauritius Others include the manufacturing sector textiles

and apparel the spinning sector electronics and light engineering medicals

and pharmaceuticals agro-business leather products and jewellery and

watches

The export-oriented manufacturing sector has been the backbone of the

Mauritian economy for the past three decades This sector remains a major

constituent of the Mauritian economy in terms of foreign exchange earnings

employment and contribution to GDP and is called upon to continue to play

an important role in the consolidation and diversification of the industrial base

of the country certain

Lastly some incentives provided by government to foreign investors In the

manufacturing sector these include among others

No customs or duty or sales tax on raw materials and equipment

No tax on dividends

No capital gains tax

Free repatriation of profits dividends and capital

50 relief on personal income tax for expatriate staff

New incentives for the ICT Sector consist inter alia of

the availability of tax holiday up to year 2008 for specified

pioneering high-skills ICT operators typically geared towards the

export market such as software development multi-media and to

high-level ICT training institutions

76

customs duty-free import of ICT and similar equipment

50 relief of personal income tax for a specified number of foreign IT

staff

duty-free import of personal belongings of foreign IT staff

effective fast track procedure for procession of visa and work

permits for foreign staff including spouses

From the above the research concludes that Mauritius being a multicultural

society as it is the culture they share does not have a direct impact on

investment in Mauritius because of it is an international hub for business It is

also expected that from the results the situation is not going to change after

time but will keep in this shape for a long since it is the government incentive

to attract more investors into the country However there are certain aspect of

culture eg believes that foreign investors need to understand and take into

consideration This study recommends any prospective investor to make good

investment in to Mauritius without fear

77

CHAPTER SIX

REFLECTIONS FROM THE STUDY

The views derived from this study might not be directly applicable to the whole

region because of variations in socioeconomic settings in various parts of the

Mauritius Also views expressed in this study were obtained mainly from

urban based managers and respondents and might not be similar to rural

based SMEs from the same community or area

Some scholars might not support the sampling techniques used but they

were the most practicable given the circumstances

Legal practitioners in Mauritius were supposed to be part of the sample but

they were hard to reach with some declining to participate

Demographically and geographically the sites were larger than anticipated

given the time and resources available for the study

Lastly the study was limited to the previous 20 years which might have

yielded same generational trend missing the opportunity to get data across

various generations within the sites

78

CHAPTER SEVEN

FUTURE RESEARCH

With more funding and resources a similar study could be conducted

throughout a wider geographic region and encompassing all categories of

SMEs micro small and medium Furthermore with more time a greater

number of interviews could be conducted which would provide richer data that

would be more in depth for conclusive analyses to be made Additionally

participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

79

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

WORD COUNT 16 969

80

APPENDICES APPENDIX 1 MauritiusData Profile

2000 2005 2006

World view

Population total (millions) 119 124 125

Population growth (annual ) 10 08 08

Surface area (sq km) (thousands) 20 20 20

Poverty headcount ratio at national poverty line ( of population)

GNI Atlas method (current US$) (billions) 444 653 681

GNI per capita Atlas method (current US$) 3740 5250 5430

GNI PPP (current international $) (billions) 891 1239 1334

GNI per capita PPP (current international $) 7510 9970 10640

People

Income share held by lowest 20

Life expectancy at birth total (years) 72 73 73

Fertility rate total (births per woman) 20 20 20

Adolescent fertility rate (births per 1000 women ages 15-19) 39 40 41

Contraceptive prevalence ( of women ages 15-49)

Births attended by skilled health staff ( of total) 100 99

Mortality rate under-5 (per 1000) 18 15 14

Malnutrition prevalence weight for age ( of children under 5)

Immunization measles ( of children ages 12-23 months) 84 98 99

Primary completion rate total ( of relevant age group) 105 97 92

Ratio of girls to boys in primary and secondary education () 98 100 103

Prevalence of HIV total ( of population ages 15-49) 06

Environment

Forest area (sq km) (thousands) 04 04

Agricultural land ( of land area) 557 557

Annual freshwater withdrawals total ( of internal resources)

Improved water source ( of population with access) 100

Improved sanitation facilities urban ( of urban population with access) 95

Energy use (kg of oil equivalent per capita)

CO2 emissions (metric tons per capita) 23

Electric power consumption (kWh per capita)

Economy

GDP (current US$) (billions) 447 629 635

GDP growth (annual ) 40 46 35

Inflation GDP deflator (annual ) 37 48 41

Agriculture value added ( of GDP) 6 6 6

Industry value added ( of GDP) 31 28 27

Services etc value added ( of GDP) 63 66 68

Exports of goods and services ( of GDP) 63 57 60

Imports of goods and services ( of GDP) 65 61 67

Gross capital formation ( of GDP) 26 23 25

Revenue excluding grants ( of GDP) 220 214 215

Cash surplusdeficit ( of GDP) -11 -21 -30

States and markets

Time required to start a business (days) 46 46

Market capitalization of listed companies ( of GDP) 298 416 567

Military expenditure ( of GDP) 02 02

Fixed line and mobile phone subscribers (per 100 people) 39 82 90

Internet users (per 100 people) 73 241 145

Roads paved ( of total roads) 97

High-technology exports ( of manufactured exports) 1 2 24

Global links

Merchandise trade ( of GDP) 82 84 91

Net barter terms of trade (2000 = 100) 100 109 115

External debt total (DOD current US$) (millions) 1713 2153 1997

Short-term debt outstanding (DOD current US$) (millions) 767 1363 1363

Total debt service ( of exports of goods services and income) 181 72 71

Foreign direct investment net inflows (BoP current US$) (millions) 266 39 107

Workers remittances and compensation of employees received (US$) (millions)

177 215 215

Official development assistance and official aid (current US$) (millions) 20 34 19

Source World Development Indicators database April 2008

81

APPENDIX 2

SUMMARY GENDER PROFILE (Mauritius)

Mauritius

Sub-Saharan Africa

Upper middle income

1980 1990 2000 2004 1980 2004 1980 2004

GNP per capita (US$) 1210 2300 3690 4640 652 601 2391 4769

Population

Total (millions) 10 11 12 12 3850 7258 4394 5762

Female ( of total) 507 501 502 503 503 501 515 514

Life expectancy at birth (years)

Male 63 66 68 69 47 46 63 66

Female 69 73 75 76 50 47 71 73

Adult literacy rate ( of people aged 15+)

Male 848 884 954

Female 750 805 942

LABOR FORCE PARTICIPATION

Total labor force (millions) 0 0 1 1 157 299 193 256

Labor force female ( of total labor force)

37 34 34 35 43 42 42 41

Unemployment

Total ( of total labor force)

33 88 102 12

Female ( of female labor force)

36 96 126 134

EDUCATION ACCESS AND ATTAINMENT

Net primary school enrollment rate

Male 91 96 94 68

Female 92 97 96 60

Progression to grade 5 ( of cohort)

Male 97 99

Female 98 99

Primary completion rates ( of relevant age group)

Male 61 105 98 66 95

Female 63 104 102 56 96

Youth literacy Rate ( of people aged 15-24)

Male 912 937 978

Female 911 954 974

HEALTH

Total fertility rate (births per woman)

27 23 20 20 67 53 31 20

Contraceptive prevalence ( of women aged 15-49)

75 26 76 22 69

95

82

APPENDIX 3

DATA COLLECTION FORM FOR THE SURVEY Sitehelliphelliphelliphelliphellip Participant numberhelliphelliphelliphellip MANAGING DIRECTOR CEO MANAGER

Age group -25 26 ndash 35 36 - 45 46-55 56-64 65+

Education Nursery ndash Standard 4

Std 5 ndash 7 (8) Form 1 ndash 2

Form 3 ndash 4 or A level

College University

Employment Yes No Business (what type)

Partnership Whole Citizen

Joint Venture

Age of Company

1-3 years 4-6 years 7-10 years

11-15 Above 15yrs

Number of Employees

10-25 50-99 100-149 150-200

Place of birth

In the constituency

Outside the constituency

Where

Residence Rural Urban Where

Before starting business

After business

Children

Boys Number

Girls Number

Any born a Yes None

Are they in school

Yes No Some

Working Yes No Some

Annual Sales

Balance Sheet

Less than R1000000

R101 000- 250 000

R251 000- 15 million

R 15 million +

Years Employed as CEO

0-3 4-7 8-14 15-19 Over 20 years

83

APPENDIX 4 Qualitative data questionnaire The following questions were used as a guide during the focus group discussions However they were not followed in the strict order or wording as they appear here

SOCIAL INCLUSION EXCLUSION

I am going to ask you questions regarding support you think the society could give foreign investors There is no right or wrong answers it is just about your opinion

a) How do you feel about foreign investors coming to Mauritius

b) How has your friendship with foreign business before and after they arrive in Mauritius

c) Do you keep in touch with foreign businesses around you and prospective investors

d) In your opinion how does foreign business feel about Mauritius

e) Are foreign businesses doing well or badly

f) What support structures or government incentives are there for foreign investors

g) What kind of support would you like to receive from the government

BUSINESS ATTITUDE AND BELIEFS

I am now going to ask you some general questions about business and your opinions about it

a) How would you describe the general business environment

b) Do you find it difficult to do business with people from different countries of the world Why

c) What do you believe the first thing to do on the morning before opening

your business (Local people) Why

d) How best can the Mauritius people be motivated into business How do you get over them

84

e) What areas do local people consider as niche areas for foreign

business

f) How do local people organize their business Why

g) As a local business person what would you consider as abomination of business in Mauritius Why

h) What is the role of women in the business sector

CULTURE

I am now going to ask you questions about the your culture

a) What are your views about business culture in Port Louis

b) What are the challenges of national culture on business practices in your opinion

c) What are the benefits of culture on business practice

d) Do you think foreign investors need to know the local language when investing in Mauritius

e) If you were to advice a foreign investor what would you want them to know about Mauritius

f) How do you think the family daily practice influences business in

Mauritius

g) What business actions of behaviors are sensitive to the local people

h) How best can foreign investors assimilate with the local business people

i) What do local people like to buy on weekends week days public religious holidays

j) What marketing strategies violet the culture of Mauritius ndashwomen naked Eating behavior Etc

85

APPENDIX 5

Introductory letter consent form

TITLE CULTURE AND INTERNATIONAL BUSINESS

ENTREPRENUERSHIP A CASE STUDY OF MAURITIUS

INTRODUCTION

I am Angelinah Boniface a student pursuing Masters of Science in

Information Systems the University of Sheffield United Kingdom I am

conducting a study on the Impact of culture on small and medium

enterprises for my dissertation The study is expected to last 3 months and a

report of the findings will be availed to all interested stakeholders including the

university as part of course requirements

PURPOSE OF THE STUDY

This study is intended to gain insight into views and opinions about

widowhood and inheritance in relation to health and well being of participants

and the community at large Evidence from this study may be useful in future

government and development agencies‟ planning and provision of relevant

interventions for the benefit of the whole community

VOLUNTARINESS AND CONFIDENTIALITY

Your participation in this study is purely voluntary and you can withdraw

at any time should you feel uncomfortable to proceed Information obtained

from this study will be used for no any other purpose other than the

dissertation It will be kept confidential only accessible to the researcher and

pseudonyms will be used to ensure anonymity and confidentiality of

participants and location The researcher will strive to treat all participants

with dignity respect equality and minimise possible harm that might arise

from the study

Agreeing to take part in this study will be treated as your consent to be

involved in this research BUT YOU HAVE THE RIGHT TO WITHDRAW

THE CONSENT

86

RISKS AND BENEFITS

There are no risks to the questions that will be asked If at any point you feel

uncomfortable to answer any question please feel free to ignore such to avoid

any harm

There is likely to be no immediate benefits to you as a participant However

the information obtained in this study will go a long way in informing the

younger generation and wider audience about the culture It might also be

used by the government and other development agencies to plan for

interventions relevant to the needs of widows in your community in the future

based on the evidence you have provided in this study

CONTACTS

The researcher can be contacted at +44 0791263163 lip07acbshefacuk

or linabonyahoocom in case of any questions issues

In case of any problems that need university attention my supervisor can be

contacted at kalbrightshefacuk

PLEASE DONrsquoT TAKE PART IN THIS STUDY IF YOU ARE BELOW 18

YEARS OF AGE

Thank you very much for your anticipated cooperation

Researcher‟s signature Participant‟s signature

helliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

87

REFERENCES

Bhagat RSet al (2002) Cultural variations in the cross-border transfer of

organizational knowledge an integrative framework Academy of

Management Review 27(2) 204ndash221

Boyacigiller NA amp Adler NJ (1991) ldquoThe parochial dinosaur organizational

science in a global contextrdquo Academy of Management Review 16(2) 262ndash

290

Bowling A (ed) (2002) Research methods in health Investigating health and

health services Buckingham Open University press

Dabee R and Greenway D (2001)The Mauritian Economy A Reader

PalgraveNew York

Dawson C D (2002) Practical research methods A user friendly guide to

mastering research techniques and projects Oxford How to Books Ltd

Denscombe M (ed) (2007) The good research guide for small scale social

research projects Berkshire Open University Press

Denscombe M(ed) (2003) The good research guide For small scale social

research projects Maidenhead Open University Press

Economic And Social Research Council (2005) ESRC research ethics

framework [online]

httpwwwesrcsocietytodayacukESRCInfoCentreopportunitiesresearch5

Fethics5Fframework [ Accessed May 05 2008]

88

Gilbert N (ed) (2001) Researching social life London Sage Publishers

Grbich C (1999) Qualitative research in health An introduction London

Sage publications

Hunter D amp Lang T (1993) The Leeds declaration Leeds Nuffield Institute

for Health

Neuman L W(ed) (2000) Social research methods qualitative and

quantitative approaches Needham Heights MA Allyn amp Bacon

Maynard M amp Purvis J (1994) Researching womens lives from a feminist

perspective London Taylor and Francis group

Muuka GN (2002) Africas informal sector matters a challenge to scholars

to close the knowledge gap Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

Business and Development International Conference Port Elizabeth April 3-

6 pp1-6

Southwood R (2004)The impact of ICT on SMEs ndash a motor for future

economic growth in hard-pressed times [Online] Balancing Act news update

wwwbalancingact-africacomnewscurrent1html [Accessed 26 January

2008]

Machacha L (2002) Impact of information technology on small and medium

enterprises (SMEs) in Botswana Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

89

Business and Development International Conference Port Elizabeth April 3-

6 pp277-82

Organisation for Economic Co-operation and Development (OECD)

(2000)OECD study highlights role of small and medium enterprises in job

creation Organisation for Economic Co-operation and Development

[Online]wwwoecdorgmediapublishpb00-11ahtm [Accessed 8 July 2008]

Commonwealth Secretariat UK (2006) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius London Commonwealth

Secretariat

Reed DM (1998) Using the Business Excellence Model in Small Service

Business British Quality Foundation

Taylor AW amp Adair RG (1994) ldquoEvolution of Quality awards and self

assessment practices in Europe a case for considering organisation sizerdquo

Total quality Management 5 (4) 227-237

United Nations (1993) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

Johanson J amp Wiedersheim-Paul F (1995) The Internationalization of the

Firm - Four Swedish Cases Journal of Management Studies 20 (3) 123-139

90

Chui ACW Lloyd AE and Kwok CCY (2002) The determination of

capital structure is national culture a missing piece to the puzzlerdquo Journal of

International Business Studies 33(1) 99ndash127

Earley PC amp Gibson CB (2002) Multinational Teams A New Perspective

Lawrence Earlbaum and Associates Mahwah NJ

Gibson CB (1999) ldquoDo they do what they believe they can Group-efficacy

beliefs and group performance across tasks and culturesrdquo Academy of

Management Journal 42(2) 138ndash152

Hofstede G (1980) Cultures Consequences International Differences in

Work-Related Values Sage Newbury Park CA

SMIDO (2006)A new Vision For SMEs Development Mauritius

Government Printer Port Louis

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Stone A (1997) SMEs and Technology why should we make special efforts

to help World Bank

Bhagat RS et al (2003) Knowledge in Cross-Cultural Management in Era

of Globalization Where Do we Go from Here in D Tjosvold and K Leung

91

(eds) Cross-Cultural Management Foundations and Future Ashgate Englan

155ndash176

Cairncross F (2001) The Death of Distance Harvard Business School Press

Boston MA

Commonwealth Secretariat UK (2005) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius Commonwealth Secretariat

Drucker PF (1995) Managing in a Time of Great Change Truman Talley

BooksDutton New York

Guilleacuten M (2001) ldquoIs globalization civilizing destructive or feeble A critique

of five key debates in the social science literaturerdquo Annual Review of

Sociology 27 235ndash260

Gibson CB and Cohen SG (2003) Virtual Teams that Work Creating

Conditions for Virtual Team Effectiveness Jossey-Bass San Francisco

Grazol P et al(2004) ldquoThe Effect of Culture on IT Diffusion Email and Fax in

Japan and the US Information Systems Researchrdquo Journal of International

Consumer Marketing 16 4 pp 29-64

Greider W (1997) One World Ready or Not Crown Business New York

92

Gertler MS (1997) The Invention of Regional Culture In Lee R and Willis J

eds Geographies of Economies London Arnold

Govindarajan V and Gupta AK (2001) The Quest for Global Dominance

Transforming Global Presence into Global Competitive Advantage Jossey-

Bass San Francisco

Haire M et al(1966)Managerial Thinking An International Study Wiley

New York

Heuer M et al(1999) Cultural stability or change among managers in

Indonesia Journal of International Business Studies 30(3) 599ndash610

Hofstede G (1997) Cultures and Organizations Software of the Mind New

York McGraw-Hill

Hofstede GH (2001) Cultures Consequences Comparing Values

Behaviors Institutions and Organizations Across Nations London Sage

Publications

Hoecklin L (1995)Embedded Autonomy States and Industrial

Transformation Princeton NJ Princeton University Press

93

IBP USA (2002) Mauritius Investment and Business Guide IB Tauris and Co

LTD London

Kerr C et al (1960) Industrialism and Industrial Man Harvard University

Press Cambridge MA

Kirkman BL amp Shapiro DL (2000) ldquoUnderstanding why team members

won‟t share an examination of factors related to employee receptivity to team-

based rewardsrdquo Small Group Research 31(2) 175ndash209

Lisenda L (2003) Small and medium-scale enterprises in Botswana their

characteristics sources of finance and problems BIDPA Gaborone

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Meredith GG (ed) (2004) Small Business Management in Australia

McGraw-Hill Sydney

Mistry PS (1999) ldquoCommentary Mauritius ndash quo vadisrdquo African Affairs 98

(393) 551ndash69

Mullins LJ(ed) (1999) Management and Organizational Behavior 5th ed

London Financial Times Pitman

94

Myers MDamp Tan FB (2002) ldquoBeyond Models of National Culture in

Information Systems Researchrdquo Journal of Global Information Management

10 (1) 112-134

Putz R (2000) ldquoCulture and entrepreneurship views from the middle and

lower level managersrdquo Journal of Business Ethics 22 145- 153

Scottish Economic Statistics Scottish ExecutiveONS IDBR (2005)Size

Analysis of Welsh Business SDR 692004Statistical Press Release URN

0440

Straub D et al (2002) rdquoTowards A Theory-Based Measurement of Culture

Journal of Global Information managementrdquo 10 (1)

Schaeffer RK (2003) Understanding Globalization The Social

Consequences of Political Economic and Environmental Change Rowman amp

Littlefield Lanham MD

SMIDOA new Vision For SMEs Development(May 1996)

SMME Task Force Report (1998) Small medium and micro-enterprises task

fore force report Government Printer Ministry of Commerce and Industry

Sondergaard M amp Hofstede G (1994) ldquoA study of Reviews Citations and

Replicationsrdquo Organization Studies 15 (3) 447-456

95

Schein EH (1992) Organizational Culture and Leadership Jossey-Bass

San Francisco

Stone A ( 1997) SMEs and Technology why should we make special efforts

to help (World Bank 1997)

Statistical Press Release (2005) URN 0592 Office for National Statistics

Weisinger JYamp Trauth EM (2002) ldquoSituating Culture in the Global

Information Sectorrdquo Information Technology amp People 15 (4) 306-320

United Nations (2005) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

viii

LIST OF ILLUSTRATIONS TABLES Table 1 THE STUDY TIME SCALE

2 RESPONDENTS RATE ACCORDING TO SECTORS

3 AGE GROUP AS PER PARTICPANT

4 GENDER PROFILE

5 EDUCATION PROFILE 6 YEARS EMPLOYED AS CEO 7 COMPANY AGE PROFILE 8 NUMBER OF EMPLOYEES 9 ANNUAL SALES 10 OWNERSHIP

FIGURES 1 MAP OF MAURITIUS SHOWING ALL PROVINCES

2 MAURITIUS MAP SHOWING POLITCAL DIVISIONS

3 THE DYNAMIC OF TOP-DOWN-BOTTOM-UP PROCESS ACROSS LEVELS OF CULTURE

4 PUTZ MODEL FOR IMMIGRANT BUSINESS AND CULTURE

5 THE BASIC MECHANISM OF INTERNATIONALISATION-STATE AND CHANGE ASPECT

ix

ABSTRACT

In this new millennium few executives can afford to turn a blind eye to global

business opportunities The globalizing wind has broadened the mindsets of

executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories One such new

trajectory is the concern with national culture Whereas traditional IB research

has been concerned with economic legal issues and organizational forms and

structures the importance of national culture has become increasingly

important in the last two decades largely as a result of the classic work of

Hofstede (1980) National culture has been shown to impact on major

business activities from capital structure (Chui et al 2002) to group

performance (Gibson 1999)

The purpose of this study was to understand the concept on how to penetrate

a new international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

Data was collected through telephone interview web survey literature review

and face to face interview involving business managers legal stakeholders

and government officials and former government ministers About 17

telephone interviews were done with only government officials 4 face to face

interviews and 140 web survey interviews questions All the respondents were

x

randomly selected and respondents would suggest further participants Data

was put in to categories and themes and analysed according to those themes

Putz (2000) model was used as guide to selection of themes

Findings revealed the following 1 Language and religion are not a barrier to

foreign investment in Mauritius 2 Mauritius is a peaceful and tolerant nation

and most of its social life revolves around family and friends 3 Market

opportunities exits in the manufacturing industry offshore financial services

cyber culture and the construction industry 4 The country‟s business

economy faces stiff competition from Botswana South Africa and Vietnam 5

The government plays an important role in ensuring security for foreign

investors

From the results it was concluded that culture plays an important role in the

daily lives of the Mauritian people but it does not have a direct impact to

investment in Mauritius

1

CHAPTER ONE

INTRODUCTION

Globally Small and Medium Enterprises (SMEs) are increasingly regarded as

vital for diversifying economies through the creation of employment

(Machacha 2002 p 277) The OECD (2000) notes that small and medium-

sized enterprises account for 60-70 percent of jobs created in member

countries Southwood (2004) in discussing the status of the SME sector in

Africa observed that governments and large corporations dominated

economies of the countries yet the real engine of economic growth lay with

SMEs Muuka (2002 p 1) in discussing the SME sector in Africa noted that

the informal sector is huge due to the large numbers of employees it absorbed

as a consequence of inadequate jobs and opportunities in the formal sector

The author points out that in many African countries the informal sector is

estimated to employ from three to six times the number of employees in the

formal sector However very little has been documented through research

about this important sector

In Mauritius the Mauritian government believes that the real engine of

sustainable and equitable growth is in the SME sectors Not only is it of great

importance for the rate of job creation and income generation but also it

deserves particular attention since the sector has been largely neglected in

the past In this respect this study of Mauritius is important in addressing

some of issues of culture by using the International business as a framework

for this study to understand the business environment in Mauritius and the

potential for growth in a global perspective (Stone 1997)

2

In this new millennium few executives can afford to turn a blind eye to global

business opportunities Japanese auto-executives monitor carefully what their

European and Korean competitors are up to in getting a bigger slice of the

Chinese auto-market Executives of Hollywood movie studios need to weigh

the appeal of an expensive movie in Europe and Asia as much as in the US

before a firm commitment The globalizing wind has broadened the mindsets

of executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories

However research shows that as markets competition and organisations

globalise the business people businesses themselves and consumers

involved in these institutions increasingly have to interact manage negotiate

and compromise with people from different cultures (Hofstede 1997

Hoecklin 1995) Global business managers report that when doing business

overseas challenges mount For example structural conditions physical

social and economic arrangements can affect business operations and

outcomes as can the varied norms and behaviours that come with different

national cultures

One such new trajectory is the concern with national culture Whereas

traditional IB research has been concerned with economiclegal issues and

organizational forms and structures the importance of national culture

broadly defined as values beliefs norms and behavioral patterns of a

national group (Hofstede1980) has become increasingly important in the last

two decades largely as a result of the classic work of Hofstede (1980)

3

National culture has been shown to impact on major business activities from

capital structure (Chui et al 2002) to group performance (Gibson 1999) For

reviews see Boyacigiller and Adler (1991) and Earley and Gibson (2002)

Weisinger and Trauth (2003) report that culture evolves and takes unique

forms in local offices of organizations This means that culture is both dynamic

and situated in its local context Thus external conditions both structural and

cultural can influence global business Yet small and medium enterprise

(SMEs) managers can have an impact on how their organizations‟ cultures

evolve Therefore strategic leaders need to introduce unique norms values

and processes that fit together coherently in successful organizations

Therefore the main purpose of this case study is to explore and understand

the Small Medium Enterprise (SMEs) business environment in Mauritius and

how SMEs can penetrate the business culture there

The purpose of this paper is therefore to explore and understand how national

culture influences international business decisions and how to culture affects

international business investment using Mauritius as a case study

In this chapter the author outlines the background of the study specifies the

study objectives describes the significance of the study gives methodological

overview and finishes off by outlining definitions of key terminologies

4

11 Background to the Study

Strategically located in the Indian Ocean at the crossroads of Africa and Asia

Mauritius is reputed for its beautiful countryside and its 150 kilometres of white

sandy beaches and transparent lagoon A British colony that gained

independence in 1968 officially known as Republic of Mauritius the country is

positioned to the east of the Madagascar Islands The geographical

coordinates of the nation are 20ordm17 South latitude and 57ordm33 East longitude

The total area covered by the island nation is 2040 square kilometres

Mauritius enjoys a maritime sub-tropical climate and is therefore an all-year-

round holiday destination From a monocrop economy depending mainly on

sugar it has diversified its economic activities into textile and apparel

industry tourism and financial service Mauritius has witnessed a massive

development in the last decades (SMIDO 2006)

5

Figure 1 Map of Mauritius showing all Provinces

Source Encarta World atlas online

6

Figure 2 Mauritius map showing political divisions of the country

Source Maps of the world online

The research area was around the capital city Port Louis marked in red For

anonymity the site was just called A or B Administratively Mauritius is divided

into nine Provinces (figure 2)

The country is remarkable in its ethnic diversity It forms a unique mosaic of

immigrants from the Indian sub-continent Africa Europe and China The

cultural diversity and harmony of the island make Mauritius a unique place in

the world The various religions found on Mauritius tend to play a major part in

7

the islands cultural events and churches temples and mosques are to be

found everywhere Hindus make up approximately half of religiously affiliated

Mauritians followed by Muslims and Christianity as the minority It is also

known for its social peace political stability and racial harmony Its steady

economic growth over the years coupled with its nation‟s social cohesion and

prosperity ensure continuing development (Country Profile 2005)

The country is equipped with a highly skilled labour force to suit virtually all

business in two international languages English and French and a very good

infrastructure thereby attracting Foreign Direct Investment The average

economic growth was 56 over the last 3 years The income per Capita has

reached 4000 US Dollars As a result the standard of living has gone up The

country has now a life expectancy rate of 714yrs an adult literacy rate of 83

(Country Profile 2005)

To face globalisation and a new economic environment the Government has

taken several steps High value-added capital intensive and knowledge-

based activities are on the priority list The Information Technology sector is

undergoing rapid changes so as to be fit for the next millennium The aim is to

make Mauritius a centre for high-tech and software services which can be

exported (Commonwealth Secretariat 2006)

8

12 An Overview of Mauritian Economy

The economy of Mauritius has experienced major structural transformation

over the last two decades The country has moved away from a mono-crop

economy with fast population growth high unemployment and low per capita

income to one that is more dynamic and diversified The sources of

diversification have been agriculture export manufacturing (mainly textile)

tourism and more recently international services with Offshore and Freeport

activities (Country profile 2005)

To respond to the global competition in these sectors Mauritius has made

extensive use of modern technology to improve its productivity and efficiency

The real growth rates have been around 54 over the past four years and

Mauritius is now classified as a middle-income country and is one of the

healthiest economies in the whole African region (Country profile 2005) The

sugar sector provided the start-up capital for the Export Processing Zones

(EPZ) The rapid rate of growth of investment in the manufacturing sector

(investment grew by over 30 each year from 1983 until the late 1990s in this

sector) that led to the success of the EPZ and the Mauritian economy as a

whole This was made possible by the confidence of entrepreneurs and

foreign investors prevailing in the country at that particular time The private

sector accounts for approximately 70 of total capital formation in Mauritius

Investment rate stood around 27 in the four years ending 1996 peaking to

30 in 1994 (SMIDO 1996)

9

When the government recommended the diversification of the economy with

the creation of Export Processing Zones in the early 1980‟s the EPZ sector

benefits from duty-free and quota free access into European Union markets

granted under the Lomeacute Convention as well as tariff preferences granted

under the General System of Preferences (GSP) by countries such as North

America and Japan The mid 1980s witnessed a textile boom raising per

capita incomes and living standards However the conclusion of the Uruguay

Round (General Agreement on Trade amp Tariffs) implies the loss of guaranteed

markets and preferential access which will result in strong competition in

these respective markets (Country profile 2005)

The new strategy of the industrial sector aims at targeting high quality and

high value added products with a view to restoring the competitiveness of the

goods by applying latest technology to the manufacturing industry and hence

improving the quality of the finished products Limited data is available

regarding the SME sector in Mauritius The current research has observed

that there is little research in the field in SME sector in Mauritius

In view of the importance of foreign investment as a source of sustenance to

economic growth the government of Mauritius has taken a series of policy

measures to encourage its flows into manufacturing offshore banking and

financial services information technology communication and tourism As far

as foreign investors are concerned Mauritius offers itself as an attractive

destination because several positive features such as political stability

10

availability of skilled labour and investment-friendly rules and institutions

(Stone 1997)

With such a promising economy there is virtually no evidence on how to

penetrate the business culture in Mauritius and how culture can affect SMEs

and business opportunities therefore this study will explore and understand

the business environment in Mauritius and the challenges of doing business

there as a foreign investor Currently there is very little research done on

SMEs and culture in Mauritius

13 Mauritius SME Background

Experience shows that attitudes towards small business vary from decade to

the next from country to country Before the industrial revolution all business

was small business but with industrial and commercial expansion of

developed nations small has become medium and medium has become big

business

Business owners and managers have often seen growth as an end in itself

and at time the cry get big or get out has been heard in most nations

(Meredith 2004) For more than two decades SMEs have experienced

favourable growth SME has long been prominent in the countrys economy

and make up a large portion of national economy in terms of output

employment and effective utilisation of regional resources Small and medium

enterprises in Europe make up 998 of all European enterprises provide

66 of its jobs and account for 65 of its business turnover (Meredith 2004)

11

In developing countries SMEs account more than 90 of all enterprises

Over the last five years they have been responsible for more than 80 of job

created (Stone 1997) On the issue of job creation Stone (1997) found that

SMEs create more employment than large enterprises and with a lower

investment per job created SMEs are not usually associated with international

activity but they do in fact play a significant international role and their

importance appears to be increasing Available data on SMEs international

activity are very limited (Stone 1997)

In general terms and depending on the country SMEs contribute between

15 and 50 of exports and between 20 and 80 of SMEs are active

exporters Overall it is estimated that SMEs now contribute between 25 and

35 of world-manufactured exports (UN 2005) Increased exports not only

boost the level of sales and employment but also extend the life cycle of

goods and services

In Mauritius SMEs represent 19 according to a report issued by the

Commonwealth Secretariat entitled a Study of Small Firm export Policies

and Institutions in Mauritius Subsequently these SMEs have developed

gradually and move from their tradition orientated operations to export-led

firms probably due to improvement of technology in the field of communication

and the new economic dimension which prevailed

At this juncture it is important to report that few studies on culture and small

and medium entrepreneurship have been conducted on Sub-Saharan Africa

12

There is a paucity of information and even those scarce studies they do not

cover broad perspectives of the situation of SMEs in Sub-Saharan Africa

Therefore this study builds upon the existing limited body of research

regarding how business cultures contribute to the success or failure of small

and medium entrepreneurs In particular it explores the business culture in

Mauritius and its barriers to penetration for new and foreign small and

medium entrepreneurs

14 Purpose Statement

The purpose of this study was to understand the concept on how to penetrate

an international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

15 Aims and Objectives

To investigate the challenges of national cultural differences in

business in Mauritius

To investigate how to penetrate the business environment for a new

and or foreign business culture especially in Mauritius

To investigate business opportunities for SMEs in Mauritius and how

these can benefit the locals

13

16 Research Question

How can Small and Medium Enterprises penetrate the business culture in

Mauritius

These sub-questions all pertain to SMEs business

o 161 SUB-QUESTIONS

What kind of businesses are operating in Mauritius now

What are their business strategies (marketing brands) etc

What are the necessary mechanisms for establishing business in

Mauritius

What are the business needs of established and starting businesses

What are the mechanisms for potential growth of local business

What are the challenges for doing business in Mauritius

How much of business behaviour is influenced by the national culture

17 The Significance of the Study

The findings of the current study will increase the understanding of cultural

barriers to market penetration for SMEs in Mauritius The study adds

knowledge to the body of literature in this area focusing at further

improvement of understudying of culture and business issues The

study becomes part of the universitys education development in line with its

obligations to the communities and the country This research problem arose

from an information need of a particular client This research therefore will try

to explore the client‟s information need and probably contribute to the wealth

of knowledge

14

18 Definitions

CULTURE Hofstede (1997) defines culture as ldquothe collective programming of

the mind which distinguishes the members of one group or category of people

from anotherrdquo It is the norms beliefs and values common to a society

Culture is about the way people understand their world and make sense of it

It only when this is taken for granted assumptions are challenged that people

realise that they even exist (Hofstede 1997)

ENTERPRISE An enterprise is considered to be any entity engaged in an

economic activity irrespective of its legal form This includes in particular

self-employed persons and family businesses engaged in craft or other

activities and partnerships or associations regularly engaged in an economic

activity (European Commission 2003)

INTERNATIONAL BUSINESS International business consists of transactions

that are devised and carried out across national borders to satisfy the

objectives of individuals and organizations The Primary Types of International

Business Activities Are Importing and Exporting Direct Foreign Investment

(Govindarajan and Gupta 2001)

GLOBALISATION refers to a bdquogrowing economic interdependence among

countries as reflected in the increased cross-boarder flow of three types of

entities goods and services capital and knowhow‟ (Govindarajan and Gupta

2001 4)

15

SMALL AND MEDIUM INTERPRISES (SME) is made up of enterprises

which employ fewer than 250 persons and which have an annual turnover not

exceeding EUR 50 million andor an annual balance sheet total not

exceeding EUR 43 million (European Commission 2003)

In Mauritius an SME has been redefined taking into account the volume of

investment in equipment which was previously one million up to 10 millions

Mauritian Rupees presently to be classified as a small enterprises and with

less than 50 and 200 employees for small and medium scale respectively

(Stone 1997)

16

CHAPTER TWO

LITERATURE REVIEW

The aim of this chapter is to introduce conceptual themes that are important in

order to understand the role of culture in international business The chapter

discusses the context of relationship between culture and international

business practices in small and medium enterprises (SMEs) and the major

challenges they face in the area of globalisation A model adopted from Putz

(2000) forms a framework for articulating the conceptual role that culture has

in international business using Mauritius as a case study

21 Embracing Cultural change in an era of globalization

A significant theoretical issue for international business is the role of culture in

the whole aspect of information transformation Since the landmark study by

Haire et al (1966) and the publication of Industrialism and Industrial Man by

Kerr et al (1960) researchers have continued to search for similarities in

culturally specific beliefs and attitudes in various aspects of work related

attitudes as well as consumption patterns and other behaviours If cultures of

the various communities of the world are indeed converging (Heuer et al

1999) International Business (IB) related practices would likely become

increasingly similar For example standard culture-free business practices

would emerge and inefficiencies and complexities associated with divergent

beliefs and practices in the past era may disappear (Heuer et al 1999)

17

Studies elsewhere suggest that culture gets affected by globalization practices

in the current 21st century Globalization has seen flows of information

technology money and people and is conducted via international

government organizations such as the African Union the North American

Free Trade Agreement (NAFTA) and the European Community global

organizations such as the International Organization for Standardization

(ISO) multinational companies (MNCs) Also includes cross-boarder alliances

in the form of joint ventures international mergers and acquisitions These

interrelationships have enhanced participation in the world economy and

have become a key to domestic economic growth and prosperity (Drucker

1995 153)

Literature suggests that because globalization tends to redistribute economic

rewards in a non-uniform pattern a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) Strong opposition to

globalization usually originates from developing countries that have been

affected by the destabilizing effects of globalisation However in recent years

there have been heated debates in Western economies triggered by

significant loss of professional jobs as a result of offshoring to low wage

countries (Schaeffer 2003)

Workers in manufacturing and farming in advanced economies are becoming

increasingly wary of globalization as their income continues to decline

18

significantly In parallel to the angry protests against globalization the flow of

goods services and investments across national boarders has continued to

fall after the rapid gains of the 1990s The creation of regional trade blocs

such as NAFTA the European Union and the Association of Southeast Asian

Nations have stimulated discussions about creating other trade zones

involving countries in South Asia Africa and other parts of the world

Although it is often assumed that countries belonging to the World Trade

Organization (WTO) have embraced globalization the fact is that the world is

only partially globalized at best (Schaeffer 2003)

Many parts of Central Asia and Eastern Europe including the former

republics of the Soviet Union parts of Latin America Africa and parts of

South Asia have raised heightened scepticism about globalization (Greider

1997) In fact less than 10 of the world‟s population are fully globalized (ie

being active participants in the consumption of global products and services)

(Schaeffer 2003)

According to Guile`n (2001) these trends might indicate that globalization is

being impeded by tendencies towards country-specific modes of economic

development making the convergence of IB-related values and practices

difficult to achieve Hofstede (1980)‟s favourite definition of f ldquoculturerdquo is

precisely that its essence is ldquocollective mental programmingrdquo it is that part of

peoples conditioning that they share with other members of their nation

region or group but not with members of other nations regions or groups

Hofstede (2001) asserts that these mental programs of people around the

19

world do not change rapidly but remain rather consistent over time His

findings tend to suggest that cultural shifts are relative as opposed to

absolute Although clusters of some countries in given geographical locales

(eg Argentina Brazil Chile) might indicate significant culture shifts towards

embracing Anglo values the changes do not diminish the absolute differences

between such countries and those of the Anglo countries (ie US Canada

UK)

According to Hofstede (1980) Examples of differences in mental

programming between members of different nations can be observed all

around us One source of difference is of course language and all that

comes with it but there is much more In Europe British people will form a

neat queue whenever they have to wait not so the French Dutch people will

as a rule greet strangers when they enter a small closed space like a railway

compartment doctor‟s waiting room or lift not so the Belgians Austrians will

wait at a red pedestrian traffic light even when there is no traffic not so with

the Dutch Swiss tend to become very angry when somebody-say a foreigner

makes a mistake in traffic not so with the Swedes All these are part of an

invisible set of mental programs which belongs to these countries‟ national

cultures Such cultural programs are difficult to change unless detaches the

individual from his or her culture Within a nation or a part of it culture

changes only slowly (Hofstede 1980)

20

This is the more so because what is in the minds of the people has also

become crystallized in the institutions namely government legal systems

educational systems industrial relations systems family structures religious

organizations sports clubs settlement patterns literature architecture and

even in scientific theories All these reflect traditions and common ways of

thinking which are rooted in the common culture but may be different for other

cultures (Hofstede 1980)

22 The dynamics of Culture as a Multi-level Multi- layer construct

Multi-level approaches of viewing culture as a multi-level construct that

consists of various levels nested within each other from the most macro level

of a global culture through national cultures organisational cultures group

cultures and cultural values represented the self aspect of the individual See

figure 3

21

Figure 3 The dynamic of top-down-bottom up process across levels of

culture (Source Schein 1992)

The model proposes that culture as multi-layer construct exist at all levels

from global to the individual Changes that take place at the external layer of

behaviour are most likely shared by individuals who belong to the same

cultural background level hence characterising the aggregated unit (Schein

1992)

Top-

Down

Individual

Behaviour

Values

Assumptions

Global Culture

National Culture

Organizational Culture

Group Culture

Bottom

Up

22

Below the global level are nested organizational layers or networks at the

national level with their local cultures varying from one nation or network to

another Further down are local organizations and although all of them share

some common values of their national culture they vary in their local

organizational cultures which are also shaped by the type of industry that

they represent the type of ownership the values of the founders etc Within

each organization are sub-units and groups that share common national and

organizational cultures but differ from each other in their unit culture based on

differences in functions of their leaders‟ values and the professional and

educational level of their members At the bottom of this structure are

individuals who through the process of socialization acquire the cultural values

transmitted to them from higher levels of culture Individuals who belong to the

same group share the same values that differentiate them from other groups

and create a group-level culture through a bottom-up process of aggregation

of shared values (Schein 1992)

Both top-down and bottom-up processes reflect the dynamic nature of culture

and explain how culture at different levels is being shaped and reshaped by

changes that occur at other levels either above it through top-down

processes or below it through bottom-up processes(Schein 1992) Similarly

changes at each level affect lower levels through a top-down process and

upper levels through a bottom-up process of aggregation The changes in

national cultures observed by Inglehart and Baker (2000) could serve as an

23

example for top-down effects of economic growth enhanced by globalization

on a cultural shift from traditional values to modernization

In view of the complexity of the organizational structures specific

organizational structures that have global character need to be established so

as to adopt common rules and procedures in order to have a common

bdquolanguage‟ for communicating across cultural borders (Kostova 1999 Kostova

and Roth 2003 Gupta and Govindarajan 2000)

Given the dominance of Western Multi National Companies (MNCs) the

values that dominate the global context are often based on a free market

economy democracy acceptance and tolerance of diversity respect of

freedom of choice individual rights and openness to change (Gupta and

Govindarajan 2000) The multi-level structure explains how a lower-level

culture is being transformed by top-down effects and that the cultural layer

that changes first is the most external layer of behaviour In the long run

bottom-up processes of shared behaviours and norms would affect the local

organizational culture as well (Schein 1992)

23 International Business and Culture

Knowledge of cultural differences is one of the key components in

international business practices and success Improving levels of cultural

awareness can help companies build international competencies and enable

individuals to become more globally sensitive (Hofstede 2003) Indeed

cultural differences contribute towards different ways people behave in

24

business Research in the field of international management underscores that

the attributes of cultural knowledge used by a firm play an important role in the

firms expansion For example Martin and Salomon (2003) found that cultural

orientation in entrepreneurial action is a central theme and can serve as a

starting point for immigrant business

ldquoUnderstanding the culture and the conceptualisation of culture in conjunction with entrepreneurial action is a critical issue when doing business in an international environment Contributions of economic geography inspired by the cultural turn which shows alternative ways of thinking about the connection between culture and economy by using a new understanding of culture are also critical (pg 198)rdquo

The statement underscores the important of understanding the culture of a

society before attempting to do business there otherwise the company runs a

risk of going out of business The ways in which different groups of people

interpret their environment and organise their activities is based the on the

specific cultural values and assumptions Certain values often thought to be

universal really do differ from culture to culture What constitutes an ethical

business practice is not the same everywhere This can be an enormously

difficult area in managing business across cultures (Straub et al 2002)

Although one may claim cultural differences to be going away they are

actually being absorbed in the business practices This makes it more critical

than ever to try to understand different cultures and their influence on the

ways people do business and view the world The costs of not understanding

are getting greater than ever The essence of culture is not what is visible on

the surface It is the shared views about what people understand and interpret

25

the world These cultural differences are crucial influences on interactions

between people working and managing across culture (Gertler 1997)

The social behaviour of a society is embedded in a particular context and is

connected to other deeply held values and beliefs (Weisinger and Trauth

2003) This means that the stakes are high for mismanaging cultural

differences Ignoring or mishandling differences can result in an inability to

retain and motivate employees a misreading of the potential of cross-border

alliances marketing and advertising blunders and failure to build sustainable

sources for competitive advantage Mismanaging cultural differences can

render otherwise successful managers and organisations ineffective and

frustrated when working across cultures (Weisinger and Trauth 2003)

24 Putz Model For Immigrant Business and Culture

Literature in the field of Immigrant Business differentiates mainly between two

basic approaches each with a different emphasis which are combined to

explain entrepreneurial action of immigrants (Putz 2000) The first approach

emphasis the bdquoopportunities‟ offered by the host country including access to

the market and job market conditions The second approach focuses on the

bdquoresources‟ of migrant groups from whom the concept of culture becomes

essential (see Figure 1 below)The Putz (2000) cultural model below is a

summary of explanatory approaches following the assumption that self

employment of certain groups is the result of their specific cultural

predisposition which favours business activity

According to Putz‟s (2000) view of cultural model the bdquoopportunities‟

approach which refers to market possibilities as an explanation for self

26

employment of immigrants assume that there are certain market segments

with favourable development perspectives especially for immigrant groups

Here two factors receive special attention which are niche markets and legal

and institutional frameworks Niche markets make the establishing of business

by immigrants easier because their needs for consumer goods create specific

demand Legal and institutional frameworks gain awareness in international

comparative studies through restrictions specified by a country regarding

business permits and regulations these frameworks influence both the extend

and the sectored structure of the bdquoimmigrant business‟ (Putz 2000)

According to Putz (2000) the observation that most immigrant groups show a

higher level of self employment rate than others often forms the background

explanation which focus on opportunities created by the host society

Resource models stress the shared characteristics of migrants of same origin

Resources models explain that certain groups have specific cultural

resources which make it easier for members of that group to become self

employed therefore one can distinguish between the cultural traditions and

socialethnic networks ( Putz 2000)

27

Figure 4 Dominating models concept of bdquoImmigrant Business‟ (Source Putz

2000)

OPPORTUNITIES

Market Access

Possibilities

Market Conditions

Niche Markets

lsquoOpenrsquo Markets

Job Market

Conditions

Access

Vertical Mobility

Legal and Institutional

Frameworks

lsquoEthnicrsquo

Business

RESOURCES

lsquoClass Resourcesrsquo lsquoCultural Resourcesrsquo

Cultural

Traditions

Social lsquoEthnicrsquo

Resources

28

When successfully managed differences in culture can lead to innovative

business practices faster and better learning within the organisation and

sustainable sources of competitive advantage (Sondergaard and Hofstede‟s

1994) In relation to that the current study argues that managers need to

study and understand the culture and the niche market before investing This

assumption has been raised as a result of the previously reported experiences

and research findings already reported so far It is therefore critically important

to understand that every society has got its own way of behaving which needs

to be understood if the business is to succeed Operating companies need to

understand what their business means to the people of the given community

and their culture

Several studies of international business have indicated that

internationalization of the firms is a process in which the firms gradually

increase their international involvement(Johanson amp Wiedersheiml 1995

Gibson 1999 Chui et al 2002 ) It seems reasonable to assume that

within the frame of economic and business factors the characteristics of this

process influence the pattern and pace of internationalization of firms Figure

5 below shows a model of the internationalization process of the firm that

focuses on the development of the individual firm and particularly on its

gradual acquisition integration and use of knowledge about foreign markets

and operations and on its successively increasing commitment to foreign

markets The basic assumptions of the model are that lack of such knowledge

is an important obstacle to the development of international operations and

that the necessary knowledge can be acquired mainly through operations

abroad (Johanson and Wiedersheiml1995)

29

FIGURE 5 The Basic Mechanism of Internalisation- State and Change Aspects

Figure 5 Basic Mechanism of Internalisation (Source Johanson amp

Wiedersheiml 1995)

Market knowledge and market commitment are assumed to affect both

commitment decisions and the way current activities are performed These in

turn change knowledge and commitment ( Aharoni 1966) In the model it is

assumed that the firm strives to increase its long-term profit which is

assumed to be equivalent to growth (Williamson 1966) The firm is also

striving to keep risk-taking at a low level These strivings are assumed to

characterize decision-making on all levels of the firm Given these premises

and the state of the economic and business factors which constitute the frame

in which a decision is taken the model assumes that the state of

internationalization affects perceived opportunities and risks which in turn

influence commitment decisions and current activities (Johanson amp

Wiedersheiml 1995)

Market

Knowledge

Market

Commitment

Commitment

Decisions

Current

Activities

30

2 5 The Role Of Information Communication Technologies

Hofstede (2001) observed that not only will cultural diversity among countries

persist but also new technologies might even intensify the cultural differences

between and within countries Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

Information communication technologies (ICTs) enable users to access varied

amounts of information globally however it does not necessarily increase

their capacity to absorb the information at the same rate as the information is

disseminated or diffused (Bhagat et al 2002) In addition information and

knowledge are interpreted through cultural lenses and the transfer or diffusion

of organizational knowledge is not easy to accomplish across cultural

boundaries (Bhagat et al 2002)

Ethnic groups around the world observe the lifestyles and cultural values of

other countries and some are interested in adopting part of the lifestyle and

values but others reject it completely (Kirkman and Shapiro 2000) The

effects of new technologies on improving efficiencies of multinational and

global corporations are well known but it is not known how these new

technologies especially computer-mediated communication and the Internet

31

might create significant shifts in the cultural patterns of different ethnic groups

(Kirkman and Shapiro 2000) or on their ways of doing business

In essence there in need to explore how the spread of ICTs is affecting the

progress of globalization in different parts of the world by incorporating the

role of cultural syndromes organizational cultures and other processes

which has recently been attempted by scholars such as Bhagat et al (2003)

and Gibson and Cohen (2003)

Information and Communications Technology (ICT) has become a catchword

with different interpretations and viewpoints even among experts As the

name suggests ICT encompasses all the technology that facilitates the

processing transfer and exchange of information and communication

services In principle ICTs have always been available since the advent of the

printing press The only difference is that from the late twentieth century rapid

advances in technology changed the traditional ways in which information was

processed communications conducted and services available (Adu 2002)

These technological advances have changed business operations and the

way people communicate They have introduced new efficiencies in old

services as well as numerous new ones One could even imagine going as far

as replacing the term Post-industrial Society with ldquoInformation Society that

is a society where the ability to access search use create and exchange

information is the key for individual and collective well-being (Kaplan 2001)

32

Globally entrepreneurship is considered as the engine of economic

development The SME sector has the potential to address socio-economic

challenges facing both developing and developed countries Without small

business development it is argued that economies stagnate unemployment

levels continue to rise and the general standard of living deteriorates

Information and communications technology (ICT) has been identified as a

major area of need to develop the SME sector in areas of information

provision access to national and international markets and other areas of

business development and support ( Ferrand and Havers 1999)

ICTs enable entrepreneurs to manage their businesses efficiently and thus

enhancing their competitiveness in the global market They can increase their

geographic reach improve efficiency in procurement and production and

improve customer communications and management For these reasons the

need to encourage and accelerate the uptake and optimal application of ICTs

by SMEs in different sectors of the economy cannot be overemphasized

(Ramsay et al 2003) The ICT sector has the potential to absorb prospective

entrepreneurs considering various business opportunities offered by the

sector Some of the business opportunities available within the sector relate to

systems integration application development database administration web

design and internet service provision The sector is also seen as an area with

major opportunities for the historically disadvantaged sectors of the

population It therefore becomes imperative for government to provide

mechanisms to accelerate the entry of SMMEs into the ICT sector (ILO 2001)

33

26 Cross Culture and International Business

Cross-cultural management advice rests on several assumptions in the

tradition of Hofstede (1997) that a) that national culture is comprised of norms

and values that can be readily identified and addressed b) that these norms

values and patterns of behaviour are stable and change at an extremely slow

pace and c) that national culture predominates over organizational culture

epistemic culture gender or other determinants of attitudes and behaviour

According to Hosftede (1997) national culture is comprised of norms and

values that can be readily identified and addressed

Organisational culture (common values and attitudes) affects organizational

success and innovation develops over time and may be difficult to change

ldquoThere is a relationship between an organization‟s culture and its

performance The pervasive nature of organizational culture means that if

change is to be brought about successfully this is likely to involve changes to

culturerdquo (Mullins 1999)

An alternative view sees culture as more complex context-specific and

dynamic For example Weisinger and Trauth (2003) examined the interaction

of national cultures the IT industry culture and a particular firm‟s

organizational culture They observed that the resulting situated culture ldquois

fluid contextually dependent and created by actors within a group who may

hold conflicting assumptions and world viewsrdquo In other words culture is as

what it is because of what it does This means that management must ensure

34

that key capabilities for example marketing analytics or process controls are

developed and nurtured across the organization

Successful global managers recognize that they cannot respond to every

unique opportunity that local settings offer Thus there is an inherent tension

in cultural sensitivity a management team which is ldquotoo sensitiverdquo to cultural

and structural features exposes the organization to the risks that come with a

lack of focus and coherence while managers who do not take cultural and

structural features into account expose the organization to the risks that come

with organizational rigidity (Myres and Tan 2002)

According to Mistry (1999) entrepreneurial networks and clusters in sub-

Saharan Africa have not generally produced the kind of strong transnational

links that characterize Asia‟s flourishing pattern of industrial diffusion The

author states that the reasons for this are complex differences in geography

different models provided by leading countries in the neighbourhood and

policies adopted by governments in the respective regions Chinese business

networks are responsible for some of the information ideas and capital that

helped launch the small Indian Ocean nation of Mauritius as an important

centre for export-oriented industry The Chinese networks in Mauritius also

continue to facilitate a role that Mauritius first began to play in the eighteenth

century they serve as a gateway for overseas Chinese entrepreneurs

interested in investing both in Mauritius and elsewhere in Africa (Mistry 1999)

35

27 Investing in Mauritius

There are a lot of advantages in investing in Mauritius The economy of the

country is stable and the graph of the economy and business is one the rise

for a considerable period of time The Mauritius government has undertaken a

sequence of strategic measures to support its course into offshore banking

manufacturing and financial services communication technology and tourism

keeping in mind the significance of foreign investment as a basis of

nourishment of the financial development (Dabee and Greenaway 2001)

According to Dabee and Greenaway (2001) tthere are various factors that

influence financiers to invest in Mauritius like accessibility of skilled labor

political constancy and venture-friendly institutions and regulations One of

the major factors for the development of Mauritius is the Foreign Direct

Investment (FDI) The government of Mauritius has given all the necessary

support to create the most favorable investment setting by the following steps

Building modern infrastructure

Endorsing suitable legislations

Commencing packages of investment inducements

Investing in human capital

Some of the advantages of investing in Mauritius are as follows

High-quality infrastructure with superb transportation

Democracy and a steady government

Free market financial system fastened on export slanting activities

Excellent system of sea and air transport

36

High standard of living good international schools

A highly educated bilingual and responsive work force

Knowledgeable financial segment providing outstanding services

Constructive market contact and good inducements ( IBP 2002)

Mauritius has various sectors where investment can be made like Information

and Communication Technology and manufacturing For doing business in

Mauritius registered trademark is required The trade marks for business are

issued by the registered Patents and Trademarks sector of Ministry of Foreign

Affairs International Trade and Cooperation In the country of Mauritius a

foreigner is eligible to hold 100 shares In this case one of the directors of

the company has to inhabit in Mauritius and the foreign individual has to

obtain a sanction from the Office of Prime Minister (IBP 2002)

In Mauritius the laws concerning income tax is based on the English law of

income tax The companies in Mauritius are lawfully accountable to pay out

income tax on their profits at an even rate of 25 A company which is

included in the country or has its scheming benefit in the country is measured

for tax reasons to be an occupant corporation To the Mauritius companies

various types of tax incentives are granted The companies that hold

certificate for Tax inducement are responsible to tax at an abridged rate of

15 while the scheduled companies are accountable to pay tax at the rate of

25 ( Dabee and Grrenaway 2001)

37

CHAPTER THREE

METHODOLOGY

Having looked at culture to some depth this chapter explains the methods

used in carrying out the study The study used mixed method approach to

allow for data corroboration and dynamism since the subject in question

needed dynamism and sensitivity in approach

This research mixed both qualitative and quantitative approaches to try and

get best possible research by combining both features because they

complement each other Quantitative data techniques condense data in order

to get a bigger picture whereas qualitative techniques are data enhancers

making it possible to see issues more clearly (Dawson 2002 Neuman 2000)

Attempt was made to keep in line with recommendation made in the Leeds

Declaration proposition number 6 which calls for the application of multiple

methods and perspectives to try and understand social and cultural issues

(Hunter and Lang 1993) Mixing qualitative and quantitative methods also

called positivist and interpretive respectively (Gilbert 2001 and Bowling 2002)

is effective in a complex issue study such as this one because they highlight

different perspectives of the same problem in this case - the public in parallel

with the individual level(Gilbert 2001) This is because quantitative methods

adopt a numerical approach to data collection and analysis to provide macro

level perspective whereas qualitative methods provide micro level perspective

through collecting data from individuals (Ibid)

38

There was also use of impersonal (public) documentation using official

records which were more library based research (Grbich 1999) on top of

theory generating field based methods (Ibid) Many researchers (Bowling

2002 Neuman 2000 Grbich 1999 Denscombe 2003 and Gilbert 2001)

concur that neither of the methods is superior to the other but just different

each having its strengths and weaknesses (Dawson 2002)

The study sought to explore the attitudes behaviour subjective meanings and

experiences of the participants making qualitative approaches best suited

because they emphasize the importance of context (Neuman 2000) However

to generate objective and factual (Maynard and Purvis 1994) statistical

figures quantitative research was more suitable Hence mixing of methods

(Dawson 2002 Denscombe 2003) to counteract weaknesses in both

approaches to give breadth and width to the study (Maynard and Purvis

1994) The flexibility of qualitative research allowed for re-focusing and

refinement of the tool dependent on participants‟ reactions throughout

(Neuman 2000) to pick up any emerging evidence thus applying the

grounded theory approach (Dawson 2002)

39

31 Research Setting

Mauritius is a volcanic island of lagoons and palm-fringed beaches in the

Indian Ocean Southern Africa east of Madagascar with a population of

about 12 million has a reputation for stability and racial harmony among its

mixed population of Asians Europeans and Africans The island has

maintained one of the developing worlds most successful democracies and

has enjoyed years of constitutional order since independence in1968 Over

the past three and half decades the country has been transformed from one

of the poorest in the world to a middle income country with per capita Gross

Domestic Product US $7000 (World Bank 2006) It has preserved its image

as one of Africas few social and economic success countries that mainly

depends on sugar and clothing export and a centre for upmarket tourism But

Mauritian exports have been hit by strong competition from low-cost textile

producers and the loss of sugar subsidies from Europe Consequently

attention has turned to diversification in line with global trends

To this end SMEs have been identified as important instruments to achieve

economic diversification Today the government vigorously supports SMEs

through a range of strategies eg the creation of a business friendly climate

via import liberalisation tax reforms and the launch of the SME Partnership

fund which gives subsidized loans to aspirant SME owners and makes the

availability of finance and facilitating access in particular for those enterprises

that have viable projects but are short of equity The Small Enterprises amp

Handicraft Development Authority (SEHDA) was created following the merger

of the Small amp Medium industries Development Organisation (SMIDO) and the

National Handicraft Promotion Agency (NHPA) The aim of the merger is to

40

rationalize and optimize the use of resources dedicated to the small business

sector in Mauritius

Various cultures and traditions flourish in peace though Mauritian Creoles

descendants of African slaves who make up a third of the population live in

poverty and complain of discrimination Mauritius was uninhabited when the

Dutch took possession in 1598 Abandoned in 1710 it was taken over by the

French in 1715 and seized by the British in 1810 The culture of the country

reflects its diverse ethnic composition There are many religious festivals

some important ones being (in random order) Divali (the hindu festival of

lights in October) Christmas Cavadee (a penitence festival of the south

Indian tradition of hinduism in January) Eid ul Fitr (celebrating the end of the

period of fasting in Islam As the Islamic calendar does not correspond to the

Gregorian calendar the date of its celebration in the year tends to vary In

2003 it was celebrated in November) With such a strong history diverse

culture and such a promising economy painted above makes Mauritius a rich

setting to investigate culture and small medium business entrepreneurship

32 Methods

As justified already this study applied method mix to exploit the benefits of all

methods used while minimising the effects of their weaknesses The obvious

benefit of method mix is that it involves more data which is likely to improve

the quality of research (Denscombe 2003) and that is what the researcher

sought to achieve In deciding which method to use it was acknowledged that

the chosen methods were not superior in any way but more suited to the study

41

circumstances based on the premise of ldquohorses for courses (Denscombe

2003 page 83)

A Questionnaire used in the online web survey allowed for collection of

data from large numbers of participants economically since the project had

financial and time limitations (Ibid) The other advantage of survey exploited is

generation of quantitative data However weaknesses of the method

(empiricism lack of depth and accuracy of responses) were a challenge The

questionnaire was open ended and was completed by the participant in the

absence of the researcher Any questions arising from the participant not

understanding or misinterpreting the question where not taken care of Focus

groups were used to gain depth into some of the emerging issues from

questionnaires to gain insights into the issues surrounding widow inheritance

and to validate some of the data (Denscombe 2003) Telephone and face to

face interviews were used to gather to gain in-depth information on the

issues

All accessible literature on culture and investment in Mauritius as well as

other parts of Africa was reviewed to get insight into any related work to

identify key issues and current knowledge gap so as to sign post this study for

any audience (Ibid)

42

33 Research Participants and sampling

It was difficult to get exact demographic data for each sector Consequently it

was not possible to use any scientific sampling techniques The study

therefore used non-probability sampling (Neuman 2002 Bowling 2002

Denscombe 2003) targeting urban based population

The sample baseline characteristics were

SME managers from aged 18 years and above and over 65 was the

limit Any religion faith Any socio-economic background and residents

of Port Luis and surrounding areas

To sample for quantitative data purposive and snowballing sampling

techniques were used because it was not possible to apply any statistical

formula in getting the samples since there was no single list of SME managers

and other stakeholders to use with any form of probability sampling

Participants were snowballed from one sector to another until the whole

sectors were covered For the focus groups homogenous and critical case

(Grbich 1999) sampling was used to get particular sub group to provide

details In this case to get government officials and the private sector who

were strong enough to talk about their experiences

A total of 161 participants were reached from all the sectors These included

SME manager government officials and the private sector The researcher

wishes to point out that these numbers were not conclusive The numbers

could be much higher because in case the researcher phoned the participants

they were not available to take the call there was no time to go back to

43

ascertain the details Those who were not willing to take part in the study were

also excluded from the above figures For the focus groups discussions 5

government officials and the private widows were invited and used Skype

technology to do a conference

The times when the participants were contacted met were entirely dependent

on participant availability and other events at the time (Gilbert 2001) It varied

between 800 am and 700 pm in the evening because of the time differences

UK and Mauritius time Care was taken to avoid compromising times such as

late in the evening or culturally sensitive days such as weekends when people

were engaged in funerals and church services in this case

The participants showed weariness towards the study because as they put it

ldquoa lot of people come along claiming to collect data to help but never show up

againrdquo

34 Data collection Instruments

The researcher developed an online quantitative data collection questionnaire

(web survey form) which was posted on the university web server with help of

the department technicians A multiple recipient list was created from the

details in the SEHDA website and was randomly sent to the recipients These

only included the SME managers from the seven sectors About 20 contacts

were selected from each sector which made a total of 140 participants

Telephone interviews were made to about 17 government officials and the

private sector who were later divide n to focus groups and a teleconferencing

44

was organised on Skype Face to face interviews were done with government

officials from the Mauritian High Commission in the UK

Apart from the questionnaire an Olympus VN 2100 PC Digital Voice Recorder

was also used during the focus group discussion with the permission of

participants also on telephone interviews and face to face interviews This

was tested set and correctly positioned by the telephone speaker before the

session began to ensure proper functioning It was fitted with a mini

microphone to improve recording quality The digital voice recorder small in

size (only 68 grams in weight) proved user friendly because it was not

intruding too much into the face of participants as opposed to older recording

devices There was a pair of AAA batteries on standby in case the batteries in

use ran flat during the session

35 Ethical Considerations

This study involved very little of sensitive issues but it strived very much to

adhere to the fundamental principles of Human Research Ethics of Respect

for Persons Beneficence and Justice The researcher ensured autonomy self

determination and protection of vulnerable persons through informed consent

participation confidentiality and thorough explanation of what the research

was all about to those with limited knowledge and education Any risk that

might have resulted from the study was minimised as much as practically

possible and the researcher took full responsibility for the protection of

participants There was no form of discrimination other than on participant

baseline characteristics

45

The study also upheld the six key ethical research principles as stipulated by

ESRC - UK (ESRC 2005) To ensure anonymity pseudonyms were used for

participants The information gathered was safely protected through password

use on the computer system and only the researcher had access to the

information The researcher was responsible for storage and destruction of

any information no longer needed such as audio files after transcription

Research respondents participated in a voluntary way free from any coercion

and free to withdraw at any point should they felt uncomfortable

The first ethical committee whose approval was sought was the University of

Sheffield Ethical committee after which the researcher sought ethical approval

from Mauritian authorities through the relevant ministries It was not straight

forward getting ethical approvals in Mauritian but ultimately the ministry of

SMEs approval was obtained

36 Procedure

After all the necessary approvals were obtained the researcher wrote an

explanatory letter (Grbich 1999) or bdquoparticipant‟s information sheet‟ (appendix

5) which included information on informed consent (Denscombe 2003)

After piloting the tools the researcher started by making calls to make

appointment for interviews As the quantitative data collection went on

recruitment of participants to take part in qualitative aspect was done

simultaneously due to time constraints The researcher used individual

judgement to asses those participants who would be courageous enough to

respond to the questionnaire online and to the interviews The managing

46

director for RCBusiness Support Ltd also provided a number of potential

respondents who were used at the initial stages of the study Each interview

session lasted averagely 50 minutes The researcher went to organise the

teleconferencing for the focus group on Skype which also lasted for average

50 minutes

37 Data Analysis

Since the distinction between quantitative and qualitative research is not

watertight (Denscombe 2003) data analysis embraced both because they

have similarities and differences (Neuman 2000) There was analysis of

words and numbers thus holistic versus specific focus (Denscombe 2003)

The analysis adopted a five stages approach (Denscombe 2007) The first

stage was data preparation followed by data exploration analysis

presentation and finally validation

Though some researchers champion for advanced inferential statistics

(Denscombe 2007) the researcher opted for descriptive statistics for the

quantitative data analysis because they still remain effective ways of data

analysis and presentation (ibid) The research data involved nominal as well

as discrete and continuous data which could effectively be analysed using the

chosen method The data was grouped frequencies were described and

finally any linkages were identified The end product of the analysis process

is presented in the results section in various formats Basic statistical

techniques were used to give the data additional credibility in terms of

interpretations of the findings (Denscombe 2007)

47

For the qualitative data the first thing was to back up the original voice

recorded focus group discussion into a password protected lap top This

ensured not only the security of the data but also a back up in case of data

loss The researcher then listened to the recording several times to familiarise

himself with the data after which transcription took place After that the data

was interpreted and categories themes were identified since thematic

analysis was employed The Putz (2000) model was used as a guide to

finding themes The findings are presented in the results section

38 Planned programme of dissemination

The study findings were disseminated to all relevant stakeholders in print

format including the university as part of the postgraduate degree requirement

in academically fulfilling format Two copies of the report were sent to the

Ministry of SMEs in Mauritius and two copies to the Board of Investment of

Mauritius in the UK as part of the requirements of ethical approval and

research permission granted by the ministry

Finally it was hoped that the report would meet publication requirements so

that it could get a wider audience through a reputable journal

48

39 Time scale

The study was anticipated to take the following breakdown from the time all

ethical approvals and consent were obtained

Table 1 Table showing the study time scale

Stage Time allocation Action item Accountable person

I Weeks 1 - 3 Research set up Sampling and

access to participant negotiations

Angelinah Boniface

II Weeks 4 - 12 Data collection and Analysis Angelinah Boniface

III Weeks 12 - 16 Analysis Report writing and

dissemination

Angelinah Boniface

310 Limitations and Delimitations

This study was not fully funded as such high telephone costs travelling

affected the exercise Only business people in Mauritius both men and women

were interviewed The study covered both local and foreign investors

Participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

49

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

A major limitation is a low response rate of the questionnaire and therefore a

representative sample of the SME population was not achieved Thus any

conclusions made from the analysis of the collected data cannot be

generalized to the broader SME population Bias may have been inadvertently

introduced during interviewing caused from such things as leading questions

50

CHAPTER 4

RESEARCH FINDINGS AND DISCUSSION This chapter aims to discus the research findings from the study The chapter

is divided into two sections the first part presents and discusses the

quantitative data and the second part discusses qualitative It is therefore

worth mentioning that the Putz (2000) model was used to guide the

qualitative data analysis and some of the themes were taken from the model

and some were generated from the research findings It must be noted that

any findings uncovered from this study cannot be generalized to the broad

public domain regarding SMEs

Section A of the questionnaire and the interview guide included questions that

collected background information on the SME managers and the responding

firms These data constitute the substantive material for analysis in the

ensuing sections The tables below depict the socio demographic

characteristics of the survey participants age group gender educational level

and experience as ownermanager In the following sections there aspects

are discussed

51

41 RESPONDENTS RATE ACCORDING TO SECTORS

TABLE 2

SECTOR SEHDAS SURVEY SENT

SURVEY RECEIVED

RESPONSE RATE

Leather and Garments

1678 20 12 60

Wood and Furniture

2196 20 11 55

Paper Products and Printing

1541 20 9 45

Chemical Rubber and Plastic

1376 20 11 55

Pottery and Ceramic

793 20

17 85

Jewellery and Related Items

1674 20 13 65

Fabricated Metal Products

1267 20 14 70

TOTAL 7 140 101 72

Table 2 shows the response rates from various sectors of SME in Mauritius

which were targeted by the online survey As the table indicates pottery and

ceramic sub sector had the highest response rate (85) with paper products

sector giving the least response rate (45) Overall 72 response rate from

all the targeted sectors was satisfactory It is worth mentioning that the total

number of participants adds to 140 since this question was only directed to

sectors not to other stakeholder in the research sample

52

42 DEMOGRAPHIC PROFILE PARTICIPANTS

TABLE 3 AGE GROUP AS PER PARTICPANT

AGE GROUP FREQUENCY PERCENTAGE

-25 7 43

26-35 34 211

36-45 53 329

46-55 35 217

56-65 22 137

gt 65 11 63

TOTAL 161 100

Evidence from most of entrepreneurial literature suggests that self-

employment becomes an increasingly attractive option as one nears middle

ages As can be seen in table 3 respondent‟s ages ranged from 25 to 65 and

the largest proportion (329) of the participants was in the age range of 36ndash

45 Additionally participants were biased towards the age ranges of between

36 and 65 and away from the under 25 and over 65

TABLE 4 GENDER PROFILE AS PER PARTICIPANT

GENDER

Male 116 720

Female 45 280

TOTAL 161 100

53

In relation to gender the research sample was predominantly male (72) a

striking although unsurprising demographic characteristic that reflects the

composition of the larger business sector in the country as a whole

Consequently only (28) were females This is clearly illustrated in table 4

above

TABLE 5 EDUCATION PROFILE AS PER PARTICIPANT

EDUCATIONAL LEVEL

Primary 8 50

Junior-level 29 180

O-level 78 484

Diploma 34 211

Higher Degrees 12 75

TOTAL 161 100

As evident from table 5 the educational levels attained by respondents varied

considerably as follows Primary School Certificate (8 or 5) Junior

Certificate (29 or 180) Ordinary Level (78 or 484) Diploma (34 or

211) and higher Degrees (12 or 75 ) On the whole though the data

suggest that the educational levels of our respondents are low the largest

proportion (398) possessing an Ordinary Level certificate

54

TABLE 6 YEARS EMPLOYED AS CEO AS PER PARTICIPANT

Years Of Employed as CEO

0-3 44 273

4-7 88 546

8-14 15 94

15-19 11 68

Over 20years 3 19

TOTAL 161 100

Not surprisingly table 6 shows that most of the responding executives did not

have education that emphasized a business curriculum This can be

understood with respect to the Mauritian educational curriculum which largely

overlooked business subjects until very recently

The research sample participants had been employed at their current firms on

average 1467 years and had an average of 12 years experience in the

manufacturing industry Four predominant job titles used by the senior

executives emerged from the questionnaireinterview responses Managing

Director (38) Director (26) Manager (20) and Chief Executive Officer

(16)

55

43 CHARACTERISTICS OF RESPONDING FIRMS

This section presents the descriptive statistics of the responding firms The

description focuses on age of the firm employment size firm revenues and

firm ownership

TABLE 7 COMPANY AGE PROFILE

Age of Company Frequency Percentage

1- 3 years 44 314

4- 6 years 68 486

7-10 years 19 136

11-15 years 7 50

Above 15 years 2 14

TOTAL 140 100

Table 7 displays the statistical data Of the firms responding the largest

proportion (486) was 4 to 6 years old Overall the sample reveals a skewed

distribution towards the ranges between 4 and 15 Also it is interesting to note

that 915 of the responding firms are mature that is beyond the start-up

phase

TABLE 8 EMPLOYEE PROFILE AS PER PARTICIPANT

Number of Employees

50-99 101 721

100-200 39 279

TOTAL 140 100

56

Unsurprisingly the vast majority of the responding businesses had fewer than

100 employees as depicted n table 8 with the largest proportion (701) in

the 50ndash99 employee categories The study found out that most small

companies would opt to have family and relatives as employees to minimise

costs Only 32 average of the firms were medium-size The preponderance

of small firms in the sample mirrors a more general pattern of firm distribution

in the country where medium and large firms are a conspicuous small

minority

TABLE 9 ANNUAL SALES AS PER COMPANY

Annual Sales

Less than R100 000 88 629

R101 000- R250 000 36 257

R251 000- R15 million 11 79

Above 15 million 5 35

Total 140 1000

As shown in table 9 the largest proportion of responding firms 88or 629

achieved a turnover below R10000000Only scant 11 or 79 posted annual

revenue in excess of R15 million

57

TABLE 10 OWNERSHIP AS PER PARTICIPANT

Ownership

Wholly Citizen 76 550

Joint Venture 42 293

Foreign Owned 22 157

TOTAL 140 100

Regarding ownership table 10 shows that an overwhelming majority or 550

of firms were wholly citizen-owned while the remaining 293and 157

were joint venture with citizen stake and foreign-owned respectively

44 Language

From most of the participants investors do not have to learn Local Mauritius

language since English and French are the official languages in the country

Since most of the investors to Mauritius are either English or French speaking

language as such is not a barrier to business practices and success for

prospective investors

ldquohellipwell it is not very important for foreign investors to learn languages

spoken in Mauritius because we can speak both English and Frenchrdquo

[Participant A5]

ldquohellipactually language is not barrier to English or French speaking investorsrdquo

[Participant A21]

58

Language is perhaps the most complex and perplexing aspect of the

Mauritian social mosaic (Rassool 1996) Contrary to the results that show that

language is not a problem for investors since most of the investors who come

to Mauritius are English or French speakers who normally fits well in the

society since these are the two official languages

This intricacy derives from the number of languages spoken combined with

the uses to which they are put and the socio-political connotations they bear

Baker and Stein (1977) scholars studying language use in Mauritius have

found that English is associated with knowledge French with culture

Creole with egalitarianism and other languages ancestral heritage

Consequently although Creole is the most widely spoken language in the

country French predominates in the media and English is the official

language of government and school instruction (Stein and Baker 1977)

According to the 1983 census the top five languages were Creole 541

Bhojpuri 204 Hindi 115 percen French 37 and Tamil 37 These

figures indicate the principal language used in the home Most Mauritians

however speak several languages

Literature suggests that global organizational structures need to adopt

common rules and procedures in order to have a common bdquolanguage‟ for

communicating across cultural borders (Kostova 1999 Kostova and Roth

2003 Gupta and Govindarajan 2000) This is directly reflected by the results

above that foreign investors need not to learn the local language of locals but

its important to create a common language within the organisation that is

59

understood by all stakeholders in the organisation for effective and efficient

communication

45 Religion

The study found that main religions in Mauritius are Hindu Muslim and

Christianity to a lesser extent Hindus make up approximately half of

religiously affiliated Mauritians Of the remaining Mauritians approximately a

third are Christians and about 15 Muslim followed by small Buddhist and

Sikh communities It is therefore imperative that a foreign investor considers

religion of the people of Mauritius before setting up a business Religion

The study also found out that various religions found on Mauritius tend to play

a major part in the islands cultural events and churches temples and

mosques are to be found everywhere Hindu and Tamil celebrations are part

of Mauritian cultural life

ldquohellipFestivals such as Divali (the festival of lights) Holi (in which participants

are covered in colourful powders) and Thai Poosam in which Tamil devotees

pierce their bodies with masses of needles as an act of penance are

popularly attended by Mauritianshelliprdquo [Participant A60]

ldquohelliphellipthere are also a number of diverse practices and superstitions

originating in beliefs brought from Africa and Asia Local sorcerers known as

longanistes or traiteurs are sometimes called in to settle arguments exact

revenge or administer love potionshelliphelliprdquo [Participant B41]

60

However all communities live together in harmony with each other regardless

of religion the study learnt

hellipHarmonious separatism is how we characterise our communal relations

in Mauritiushellip [Participant A13]

Since all citizens are ldquodescendants of slavery there are no tribes unlike

other African countries This has made integration and assimilation easier and

it makes it very easy for any SME to adapt to the local conditions due to pre

existing harmonyrdquohellip [Participant A13]

It is worth noting that businesses remain closed in public religious days but

the purchasing power remains the same regardless of whether it‟s a public

holiday or not

ldquohellipthe demand is not dependent on whether itrsquos a holiday or nothelliprdquo

[Participant A11]

ldquohellipit doesnrsquot matter really whether its holiday or religious holidayhelliprdquo

[Participant A21]

According to Stein and Baker (1977) the Mauritian society is noteworthy for

its high degree of religious tolerance Mauritians often share in the

observances of religious groups other than their own In part as a result of the

multiplicity of religions Mauritius has more than twenty national holidays In

addition the government grants subsidies to all major religious groups

61

according to their membership (Stein and Baker 1977)This is also evident

from the results of the research

Ethnicity religion and language have been important factors in shaping the

way Mauritians relate to each other in the political and social spheres Despite

the fact that sectarian factors are less of a determining factor in peoples

social and political behaviour they remain an important clue to the peoples

past and self-identity (Rassool 2001) As a foreign investor understanding

the religious belies of a society and taking all the necessary details in to

consideration play a major role in an international business environment

setting (Hosftede 1980) For example observing religious holiday and making

sure employees get days off and annual leaves on such important days

having prayer rooms for those willing to pray at work and creating a non-

discriminatory environment for all employees

It is worth mentioning that while religion does not have a direct impact on

Mauritius investment since it an international business hub However it is

important for investors to take note of all the aspects of religion since it plays a

very important role in lives of the Mauritians For example there are religious

holidays as an employer it is important to follow the religious holiday calendar

and give annual leaves to employees on such important days

46 Social Life

For the interest of prospective investors the study found that the social life in

Mauritius is very much close to families and friends People all meet at open

markets for normal shopping and socialise over weekends ldquoeven ministers

62

managing directors of big companies go to open marketsrdquo [Participant

A12]

There is no busy night life in the country as well as cinema and theatres

because most people prefer home video entertainment ldquoMost people found at

social places like cinemas pubs clubs etc are employees and not

employersrdquohelliphellip [Participant A12] Prospective investors should therefore

know that they are likely to meet business associates at board rooms or at

their offices rather than at social centres

In a society where tolerance is a national virtue and ethnic conflicts are

invisible to the casual visitor it takes time to learn the dos and donts of

socialising ldquohelliphere in Mauritius you must realize that we walk on eggs

continuouslyhelliprdquo [Participant B36] For a peaceful and tolerant as Mauritius

undoubtedly is the diverse groups populating the island do not collectively

make up a nation Mauritius like any other island is a nation of nations and

compromise is the order of the day be it in politics in the economy in the

media or at a dinner party the study found

The study found out that unlike other African societies Mauritius people would

prefer to stay at home and watch movies play video games with kids or visit

friends and relatives to socialise or for a night out There are not many social

night clubs in Mauritius as compared to the United Kingdom ldquohellipmany homes

today have a Digital Video Decoders (DVD) sets and donrsquot see the importance

of going out to cinemas and would helliphelliphelliprdquo [Participant A12]

63

This does not come as a surprise since literature suggests that Mauritius

though it is multicultural society and an international hub for business there

are a quiet peaceful and tolerant nation and would prefer to keep their space

(Stein and Baker 1977)

47 Market Accessibility

The study found that as first foreign investor Mauritius government has open

market programme When the free operational zone initiative began investors

imported raw materials imported duty free and foreign companies had to

show transformation of raw materials into fished exports since the

government‟s aim was to increase exports thus improve balance of trade

However in the early stages the initiative did not work as expected because

of certain barriers

Lack of adequate government incentives to lure more investors

Too much repetition meaning most of the companies where doing the

same thing

Lack of skilled human resources

The scenario is summarised by participant B3 in the following

statementldquohelliphellipour people did not have culture of businessrdquo

For more access to the markets further initiatives were put into place The

government assured investors of freedom of capital movement that is the

investors were guaranteed that they would bring their money into and out of

the country whenever they felt like doing so In addition the government

64

embarked on providing more facilities (industrial buildings) and infrastructures

all over the country opening up rural areas because towns already had

infrastructures Lastly first time investors were provided with free access to

customs thus maintaining the earlier option of tax free imports

While Mauritius was doing all these events elsewhere in the world played to

their favour European Union and USA were imposing import quotas on

Chinese and Indian imports to prevent damping So these investors had to

look for alternative markets and Mauritius turned out to be one of such

markets But the government had to act quickly to avoid bdquotransit investors‟

ldquohellipthey are investors who want to do business when it favours them but when

they begin to loose certain privileges or profits get diminished then they take

offrdquohelliphellip [Participant B3]

To avoid this foreign investors were made to transfer skills and knowledge to

local community which led to emergence of Mauritius community of

manufacturing

ldquowho started from easy stitching like socks pyjamas bras etc and later

upgraded to big Mauritius labelshelliprdquo [Participant B3]

The study further found that the initiative did not stop there The government

further established Mauritius Enterprise Development Investment Authority

(MEDIA) in 1985 which took lead in looking for prospective investors from

65

Europe USA Hong Kong and India among others Any willing investor was

transported to Mauritius and accommodated freely on government accounts to

tour the country and carry out investment feasibility studies This helped to

popularise the investment opportunities in Mauritius and attracted many more

investors Currently MEDIA has been transformed into Mauritius Board of

Investment which is no longer in charge of managing industries but

ldquopromotes Mauritius businesses abroad and participates in trade fairs to

further open uprdquo [participant B3]

The study also found out that there are specific niche markets for foreign

investment in Mauritius namely the Offshore Industry the Financial Industry

the Construction and Tourism especially in the area of high class luxury

property market in form of villas hotels and apartments and of recent the

Information Technology (IT) industry These industries cover a large spectrum

including SMEs

ldquohellipone of these sectors makes a very good investment for any investor

especially the construction industryhelliprdquo [Participant A89]

The results agree with Putz (2000) which notes that niche markets make

establishing a business by immigrants easier because the immigrants needs

for consumer goods create a specific demand This is evidence by all the

incentive the Mauritian government have put in order to attract foreign

investors in to country for the benefit of the Mauritian population Furthermore

Putz (2000) emphasise the opportunities offered by the host country including

66

access to the market and job market conditions as important factors for

international business

48 The role of ICT to SME business in Mauritius

The study found that Mauritius has a very well established ICT sector It has

formed the backbone of SME success in Mauritius As early as 1990 the

country provided hellip ldquothe fastest broadband in the world to help SME business

investors who were each allocated free 2MB internet accessrdquohellip[Participant

A 23] Recently the government has in turn invested a lot of money in

developing a cyber city a few kilometres away from the capital Port Louis

which will form the hub for future investments

This high level of ICT development in the country has created SME in areas

such as offshore financial services calls centres and enhanced tourism

industry growth Any prospective investors are guaranteed of highly

developed ICT backed up by highly qualified local human resources The

offshore investment sector has even been further boosted byhellipldquobilateral

agreements with India allowing companies registered in Mauritius to transfer

funds to India tax freerdquohellip[participant B13]

It is hoped that in helliprdquo5 years time the whole island will have free wifi

connectivityrdquo participant B33 The country not only makes use of its advanced

ICT sector but has become a big player in the region as well For example

Mauritius state informatics computerised South African government in 1996 It

has also won other computerisation contracts in Zambia Zimbabwe Namibia

Kenya and Ghana To sustain such success ldquopartnerships have been formed

67

with global players such as Microsoft to provide training not just to Mauritius

nationals but other scholars from the South Eastern Africa region as

wellrdquohellip[participant B13]As matter of fact the government of Mauritius has

invested billions in building s cyber-city a few miles aware from the capital

Port Louis

ldquoits opening in July this year and it is expected to be the centre of attraction

for investorsrdquo [Participant B13]

ldquoactually the government invested in this cyber-city with the intention to

attract European and American investorsrdquo [Participant A6]

From these results there is evidence that technology plays a major role in

SME development Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

68

48 Governance and the role of women in SME sector

in Mauritius

Mauritius is a multicultural country with ldquo70 of the population of Chinese

Indian ancestry 2 white French origin and the remaining mixed race ndash

creolesrdquo [participant A17] Europe has not have a lot if cultural influence on the

country and predominant cultures are Asian African cultures Study found

that common folklore popular songs in Mauritius would also be ordinary

found on other African countries such as Senegal Mozambique Cameroon

and Sierra Leone among others signifying deep rooted African traditions

The government maintains ndash discrimination laws for either gender In the early

stages of SME development women provided the bulk of the labour in the

rural areas as industries moved away from cities into the rural areas There

are concerted efforts to get women into jobs especially leadership roles

ldquowomen themselves are too slow to act and take advantage of the

government incentivesrdquo

The study found out that woman in Mauritius do not occupy positions of

strategic power decision making This is not a surprise because it is the same

with most Southern African countries The government of Mauritius has put a

lot of structures to support women in business but women are taking it slow to

utilize these structures

69

There are many government agencies and organizations headed by women

and even cabinet posts but most women would rather stay out of politics

becausehelliphellipldquopolitics can get very dirty involving personal lives of politicians

which men donrsquot mind but women do mind a lot aboutrdquohellip[participant A 17)

However in other sectors like education and healthcare there are many

women represented in the labour force

The study also found out that just like any other society one can not ldquohellipstop

some kind of abuse for both males and females There are cases of both

female and male harassment but the law comes in to protect such victims

There are also cases of petty crime and rape involving women either as

perpetrators or victimsrdquohellip [Participant A13]

According to AllAfrica Global Media (2008) the winds of change are blowing

across the island of Mauritius and many men in this traditionally conservative

nation are working hand in hand with women to see that the common sense of

gender equality prevails The absence of women at the decision-making table

usually means the absence of their priorities and needs Irrespective of the

Southern African Develoment Community (SADC) Declaration there are so

few women in politics This is evident from the results of the study which found

that women will rather do health jobs and education than to play the dirty

tricks of politics

Women councillors make up a mere 37 in the Moka-Flacq District Council

This is the lowest figure not only in Mauritius but also in the SADC region

70

This is far from the 2005 30 target not to mention the 50 goal now being

set for the region and included the draft Protocol on Gender and Development

up for review at the August SADC Heads of State Summit ( AllAfrica Global

Media 2008)The results found out that there is also a few representations of

women in business Women do mostly the dirty jobs of caring for children and

their families and do not have the courage to enter the business sector This is

not surprising especially in the SADC region women play the minority role

and are rarely represented at the strategic decision making level hence their

needs are always neglected resulting in women poverty

49 Challenges faced by the country and hence SME investors

Stiff competition from other countries such ashelliphellipldquoBotswana Vietnam and

South East Asia in the textile industry due to cheap labour Maldives and the

Caribbean Islands for tourism difficult in Training enough qualified personnel

in ICT to cope with demand International competition and access to fundsrdquo

hellip[participant B13]

To face these challenges the study found that the country has expanded

tertiary education and formed partnerships with foreign universities such as

ldquoFrench Scientific University which has been running Medical school in

Mauritius for 10 years By the time of this study an agreement had been

reached by Thames valley university (UK) to open up campus in

Mauritiusrdquohellip[participant B15] The aim of the government is to offer high

quality education to students from the region as well as far away like China at

affordable cost and to compete with European universities Further to

71

educational development the study also found out that the country is striving

to create partnerships with ldquoresearch organisations and to create high quality

healthcare so as to benefit from health tourism where would just travel to the

country to get affordable high quality specialised health carerdquohelliphellip [Participant

A3]

Finally results show that there is stiff competition from different sectors of

business and other force which needs to be taken into consideration when

doing business internationally Globalization tends to redistribute economic

rewards in a non-uniform manner a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) It essential to know all

the factors surrounding the business sector and understanding all the

business practices before investing to avoid any loss

72

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

Research on culture and IB is definitely a bdquogrowth‟ area because the business

world is in many ways becoming one The researcher concluded the following

based on study findings

Firstly the cultural diversity and harmony of the island make Mauritius a

unique place in the world It is also known for its social peace political stability

and racial harmony Its steady economic growth over the years coupled with

its nation‟s social cohesion and prosperity ensure continuing development

Secondly Mauritius enjoys a literacy rate over 80 percent Skilled labour

graduates and qualified professional including lawyers engineers IT

programmers consultants accountants and chartered secretaries are

available to suit virtually all business needs in two international languages

English and French Language is therefore not a barrier to foreign investment

In addition academic training at the University of Mauritius and the newly

established University of Technology a comprehensive system of vocational

training through the Industrial and Vocational Training Board (IVTB) ensures a

ready supply of skills in a number of fields such as tourism engineering

electronics jewellery ICT printing and textiles

Thirdly In view of the importance of foreign investment as a source of

sustenance to economic growth the government of Mauritius has taken a

series of policy measures to encourage its flows into manufacturing offshore

73

banking and financial services information technology communication and

tourism As far as foreign investors are concerned Mauritius offers itself as an

attractive destination because several positive features such as political

stability availability of skilled labour and investment-friendly rules and

institutions

Fourthly after a sustained growth path over the last three decades based on

sugar textiles and tourism Mauritius is now shifting gears to move towards a

higher stage of economic development so as to consolidate its position as a

premier international hub Foreign Direct Investment (FDI) has played an

important role in the development of Mauritius and will again be decisive when

the country embarks on high value-added capital intensive and knowledge-

based activities

Fifthly the government plays the role of a facilitator and has endeavoured at

all times to create the most conducive investment environment by enacting

appropriate legislations building state-of-the-art infrastructure investing in

human capital and introducing packages of investment incentives for the

manufacturing financial services and ICT sectors so as to enhance the image

of Mauritius

In this respect the Board of Investment (BOI) is the first contact point for

anyone investing in Mauritius Operating under the aegis of the Ministry of

Finance the BOI was established in March 2001 under the Investment

74

Promotion Act to give a new impetus to foreign direct investment The BOI is

the apex organization for the promotion and facilitation of investment in

Mauritius The primary role of BOI is to stimulate the development expansion

and growth of the economy by promoting Mauritius as a competing business

and service centre It aims at streamlining the legal framework and to make

better provision for the promotion and facilitation of investments in Mauritius It

acts as a facilitator and provides a one-stop shop service to both local and

foreign investors ensuring reliable and speedy processing of applications The

BOI receives processes and approves all applications for investing in

Mauritius It also assists investors in obtaining the necessary secondary

permits and clearances from relevant authorities thus ensuring a speedy

implementation project

Six Mauritius pursues a liberal investment policy and actively encourages

foreign direct investment in all sectors of the economy Attractive packages of

both fiscal and non-fiscal incentives tailor-made to the needs of each priority

area of development are offered to investors Excellent opportunities for

investment in Mauritius exist in various sectors of the economy including

manufacturing information technology knowledge industry regional

headquarters tourism and leisure financial services Freeport activities

amongst other sectors Some of the priority areas are in Information and

Communication Technology which is set to a play a lead role in the economic

development of the country in the medium and long terms The availability of

high bandwidth connectivity (with SAFE Project and international Gateways)

at near global parity in quality and tariff on the one hand and the setting up of

75

dedicated IT habitats including the Cyber city at Ebeacutene on the other hand

plus total Government support to this industry are testimony of the importance

of this industry to Mauritius Others include the manufacturing sector textiles

and apparel the spinning sector electronics and light engineering medicals

and pharmaceuticals agro-business leather products and jewellery and

watches

The export-oriented manufacturing sector has been the backbone of the

Mauritian economy for the past three decades This sector remains a major

constituent of the Mauritian economy in terms of foreign exchange earnings

employment and contribution to GDP and is called upon to continue to play

an important role in the consolidation and diversification of the industrial base

of the country certain

Lastly some incentives provided by government to foreign investors In the

manufacturing sector these include among others

No customs or duty or sales tax on raw materials and equipment

No tax on dividends

No capital gains tax

Free repatriation of profits dividends and capital

50 relief on personal income tax for expatriate staff

New incentives for the ICT Sector consist inter alia of

the availability of tax holiday up to year 2008 for specified

pioneering high-skills ICT operators typically geared towards the

export market such as software development multi-media and to

high-level ICT training institutions

76

customs duty-free import of ICT and similar equipment

50 relief of personal income tax for a specified number of foreign IT

staff

duty-free import of personal belongings of foreign IT staff

effective fast track procedure for procession of visa and work

permits for foreign staff including spouses

From the above the research concludes that Mauritius being a multicultural

society as it is the culture they share does not have a direct impact on

investment in Mauritius because of it is an international hub for business It is

also expected that from the results the situation is not going to change after

time but will keep in this shape for a long since it is the government incentive

to attract more investors into the country However there are certain aspect of

culture eg believes that foreign investors need to understand and take into

consideration This study recommends any prospective investor to make good

investment in to Mauritius without fear

77

CHAPTER SIX

REFLECTIONS FROM THE STUDY

The views derived from this study might not be directly applicable to the whole

region because of variations in socioeconomic settings in various parts of the

Mauritius Also views expressed in this study were obtained mainly from

urban based managers and respondents and might not be similar to rural

based SMEs from the same community or area

Some scholars might not support the sampling techniques used but they

were the most practicable given the circumstances

Legal practitioners in Mauritius were supposed to be part of the sample but

they were hard to reach with some declining to participate

Demographically and geographically the sites were larger than anticipated

given the time and resources available for the study

Lastly the study was limited to the previous 20 years which might have

yielded same generational trend missing the opportunity to get data across

various generations within the sites

78

CHAPTER SEVEN

FUTURE RESEARCH

With more funding and resources a similar study could be conducted

throughout a wider geographic region and encompassing all categories of

SMEs micro small and medium Furthermore with more time a greater

number of interviews could be conducted which would provide richer data that

would be more in depth for conclusive analyses to be made Additionally

participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

79

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

WORD COUNT 16 969

80

APPENDICES APPENDIX 1 MauritiusData Profile

2000 2005 2006

World view

Population total (millions) 119 124 125

Population growth (annual ) 10 08 08

Surface area (sq km) (thousands) 20 20 20

Poverty headcount ratio at national poverty line ( of population)

GNI Atlas method (current US$) (billions) 444 653 681

GNI per capita Atlas method (current US$) 3740 5250 5430

GNI PPP (current international $) (billions) 891 1239 1334

GNI per capita PPP (current international $) 7510 9970 10640

People

Income share held by lowest 20

Life expectancy at birth total (years) 72 73 73

Fertility rate total (births per woman) 20 20 20

Adolescent fertility rate (births per 1000 women ages 15-19) 39 40 41

Contraceptive prevalence ( of women ages 15-49)

Births attended by skilled health staff ( of total) 100 99

Mortality rate under-5 (per 1000) 18 15 14

Malnutrition prevalence weight for age ( of children under 5)

Immunization measles ( of children ages 12-23 months) 84 98 99

Primary completion rate total ( of relevant age group) 105 97 92

Ratio of girls to boys in primary and secondary education () 98 100 103

Prevalence of HIV total ( of population ages 15-49) 06

Environment

Forest area (sq km) (thousands) 04 04

Agricultural land ( of land area) 557 557

Annual freshwater withdrawals total ( of internal resources)

Improved water source ( of population with access) 100

Improved sanitation facilities urban ( of urban population with access) 95

Energy use (kg of oil equivalent per capita)

CO2 emissions (metric tons per capita) 23

Electric power consumption (kWh per capita)

Economy

GDP (current US$) (billions) 447 629 635

GDP growth (annual ) 40 46 35

Inflation GDP deflator (annual ) 37 48 41

Agriculture value added ( of GDP) 6 6 6

Industry value added ( of GDP) 31 28 27

Services etc value added ( of GDP) 63 66 68

Exports of goods and services ( of GDP) 63 57 60

Imports of goods and services ( of GDP) 65 61 67

Gross capital formation ( of GDP) 26 23 25

Revenue excluding grants ( of GDP) 220 214 215

Cash surplusdeficit ( of GDP) -11 -21 -30

States and markets

Time required to start a business (days) 46 46

Market capitalization of listed companies ( of GDP) 298 416 567

Military expenditure ( of GDP) 02 02

Fixed line and mobile phone subscribers (per 100 people) 39 82 90

Internet users (per 100 people) 73 241 145

Roads paved ( of total roads) 97

High-technology exports ( of manufactured exports) 1 2 24

Global links

Merchandise trade ( of GDP) 82 84 91

Net barter terms of trade (2000 = 100) 100 109 115

External debt total (DOD current US$) (millions) 1713 2153 1997

Short-term debt outstanding (DOD current US$) (millions) 767 1363 1363

Total debt service ( of exports of goods services and income) 181 72 71

Foreign direct investment net inflows (BoP current US$) (millions) 266 39 107

Workers remittances and compensation of employees received (US$) (millions)

177 215 215

Official development assistance and official aid (current US$) (millions) 20 34 19

Source World Development Indicators database April 2008

81

APPENDIX 2

SUMMARY GENDER PROFILE (Mauritius)

Mauritius

Sub-Saharan Africa

Upper middle income

1980 1990 2000 2004 1980 2004 1980 2004

GNP per capita (US$) 1210 2300 3690 4640 652 601 2391 4769

Population

Total (millions) 10 11 12 12 3850 7258 4394 5762

Female ( of total) 507 501 502 503 503 501 515 514

Life expectancy at birth (years)

Male 63 66 68 69 47 46 63 66

Female 69 73 75 76 50 47 71 73

Adult literacy rate ( of people aged 15+)

Male 848 884 954

Female 750 805 942

LABOR FORCE PARTICIPATION

Total labor force (millions) 0 0 1 1 157 299 193 256

Labor force female ( of total labor force)

37 34 34 35 43 42 42 41

Unemployment

Total ( of total labor force)

33 88 102 12

Female ( of female labor force)

36 96 126 134

EDUCATION ACCESS AND ATTAINMENT

Net primary school enrollment rate

Male 91 96 94 68

Female 92 97 96 60

Progression to grade 5 ( of cohort)

Male 97 99

Female 98 99

Primary completion rates ( of relevant age group)

Male 61 105 98 66 95

Female 63 104 102 56 96

Youth literacy Rate ( of people aged 15-24)

Male 912 937 978

Female 911 954 974

HEALTH

Total fertility rate (births per woman)

27 23 20 20 67 53 31 20

Contraceptive prevalence ( of women aged 15-49)

75 26 76 22 69

95

82

APPENDIX 3

DATA COLLECTION FORM FOR THE SURVEY Sitehelliphelliphelliphelliphellip Participant numberhelliphelliphelliphellip MANAGING DIRECTOR CEO MANAGER

Age group -25 26 ndash 35 36 - 45 46-55 56-64 65+

Education Nursery ndash Standard 4

Std 5 ndash 7 (8) Form 1 ndash 2

Form 3 ndash 4 or A level

College University

Employment Yes No Business (what type)

Partnership Whole Citizen

Joint Venture

Age of Company

1-3 years 4-6 years 7-10 years

11-15 Above 15yrs

Number of Employees

10-25 50-99 100-149 150-200

Place of birth

In the constituency

Outside the constituency

Where

Residence Rural Urban Where

Before starting business

After business

Children

Boys Number

Girls Number

Any born a Yes None

Are they in school

Yes No Some

Working Yes No Some

Annual Sales

Balance Sheet

Less than R1000000

R101 000- 250 000

R251 000- 15 million

R 15 million +

Years Employed as CEO

0-3 4-7 8-14 15-19 Over 20 years

83

APPENDIX 4 Qualitative data questionnaire The following questions were used as a guide during the focus group discussions However they were not followed in the strict order or wording as they appear here

SOCIAL INCLUSION EXCLUSION

I am going to ask you questions regarding support you think the society could give foreign investors There is no right or wrong answers it is just about your opinion

a) How do you feel about foreign investors coming to Mauritius

b) How has your friendship with foreign business before and after they arrive in Mauritius

c) Do you keep in touch with foreign businesses around you and prospective investors

d) In your opinion how does foreign business feel about Mauritius

e) Are foreign businesses doing well or badly

f) What support structures or government incentives are there for foreign investors

g) What kind of support would you like to receive from the government

BUSINESS ATTITUDE AND BELIEFS

I am now going to ask you some general questions about business and your opinions about it

a) How would you describe the general business environment

b) Do you find it difficult to do business with people from different countries of the world Why

c) What do you believe the first thing to do on the morning before opening

your business (Local people) Why

d) How best can the Mauritius people be motivated into business How do you get over them

84

e) What areas do local people consider as niche areas for foreign

business

f) How do local people organize their business Why

g) As a local business person what would you consider as abomination of business in Mauritius Why

h) What is the role of women in the business sector

CULTURE

I am now going to ask you questions about the your culture

a) What are your views about business culture in Port Louis

b) What are the challenges of national culture on business practices in your opinion

c) What are the benefits of culture on business practice

d) Do you think foreign investors need to know the local language when investing in Mauritius

e) If you were to advice a foreign investor what would you want them to know about Mauritius

f) How do you think the family daily practice influences business in

Mauritius

g) What business actions of behaviors are sensitive to the local people

h) How best can foreign investors assimilate with the local business people

i) What do local people like to buy on weekends week days public religious holidays

j) What marketing strategies violet the culture of Mauritius ndashwomen naked Eating behavior Etc

85

APPENDIX 5

Introductory letter consent form

TITLE CULTURE AND INTERNATIONAL BUSINESS

ENTREPRENUERSHIP A CASE STUDY OF MAURITIUS

INTRODUCTION

I am Angelinah Boniface a student pursuing Masters of Science in

Information Systems the University of Sheffield United Kingdom I am

conducting a study on the Impact of culture on small and medium

enterprises for my dissertation The study is expected to last 3 months and a

report of the findings will be availed to all interested stakeholders including the

university as part of course requirements

PURPOSE OF THE STUDY

This study is intended to gain insight into views and opinions about

widowhood and inheritance in relation to health and well being of participants

and the community at large Evidence from this study may be useful in future

government and development agencies‟ planning and provision of relevant

interventions for the benefit of the whole community

VOLUNTARINESS AND CONFIDENTIALITY

Your participation in this study is purely voluntary and you can withdraw

at any time should you feel uncomfortable to proceed Information obtained

from this study will be used for no any other purpose other than the

dissertation It will be kept confidential only accessible to the researcher and

pseudonyms will be used to ensure anonymity and confidentiality of

participants and location The researcher will strive to treat all participants

with dignity respect equality and minimise possible harm that might arise

from the study

Agreeing to take part in this study will be treated as your consent to be

involved in this research BUT YOU HAVE THE RIGHT TO WITHDRAW

THE CONSENT

86

RISKS AND BENEFITS

There are no risks to the questions that will be asked If at any point you feel

uncomfortable to answer any question please feel free to ignore such to avoid

any harm

There is likely to be no immediate benefits to you as a participant However

the information obtained in this study will go a long way in informing the

younger generation and wider audience about the culture It might also be

used by the government and other development agencies to plan for

interventions relevant to the needs of widows in your community in the future

based on the evidence you have provided in this study

CONTACTS

The researcher can be contacted at +44 0791263163 lip07acbshefacuk

or linabonyahoocom in case of any questions issues

In case of any problems that need university attention my supervisor can be

contacted at kalbrightshefacuk

PLEASE DONrsquoT TAKE PART IN THIS STUDY IF YOU ARE BELOW 18

YEARS OF AGE

Thank you very much for your anticipated cooperation

Researcher‟s signature Participant‟s signature

helliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

87

REFERENCES

Bhagat RSet al (2002) Cultural variations in the cross-border transfer of

organizational knowledge an integrative framework Academy of

Management Review 27(2) 204ndash221

Boyacigiller NA amp Adler NJ (1991) ldquoThe parochial dinosaur organizational

science in a global contextrdquo Academy of Management Review 16(2) 262ndash

290

Bowling A (ed) (2002) Research methods in health Investigating health and

health services Buckingham Open University press

Dabee R and Greenway D (2001)The Mauritian Economy A Reader

PalgraveNew York

Dawson C D (2002) Practical research methods A user friendly guide to

mastering research techniques and projects Oxford How to Books Ltd

Denscombe M (ed) (2007) The good research guide for small scale social

research projects Berkshire Open University Press

Denscombe M(ed) (2003) The good research guide For small scale social

research projects Maidenhead Open University Press

Economic And Social Research Council (2005) ESRC research ethics

framework [online]

httpwwwesrcsocietytodayacukESRCInfoCentreopportunitiesresearch5

Fethics5Fframework [ Accessed May 05 2008]

88

Gilbert N (ed) (2001) Researching social life London Sage Publishers

Grbich C (1999) Qualitative research in health An introduction London

Sage publications

Hunter D amp Lang T (1993) The Leeds declaration Leeds Nuffield Institute

for Health

Neuman L W(ed) (2000) Social research methods qualitative and

quantitative approaches Needham Heights MA Allyn amp Bacon

Maynard M amp Purvis J (1994) Researching womens lives from a feminist

perspective London Taylor and Francis group

Muuka GN (2002) Africas informal sector matters a challenge to scholars

to close the knowledge gap Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

Business and Development International Conference Port Elizabeth April 3-

6 pp1-6

Southwood R (2004)The impact of ICT on SMEs ndash a motor for future

economic growth in hard-pressed times [Online] Balancing Act news update

wwwbalancingact-africacomnewscurrent1html [Accessed 26 January

2008]

Machacha L (2002) Impact of information technology on small and medium

enterprises (SMEs) in Botswana Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

89

Business and Development International Conference Port Elizabeth April 3-

6 pp277-82

Organisation for Economic Co-operation and Development (OECD)

(2000)OECD study highlights role of small and medium enterprises in job

creation Organisation for Economic Co-operation and Development

[Online]wwwoecdorgmediapublishpb00-11ahtm [Accessed 8 July 2008]

Commonwealth Secretariat UK (2006) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius London Commonwealth

Secretariat

Reed DM (1998) Using the Business Excellence Model in Small Service

Business British Quality Foundation

Taylor AW amp Adair RG (1994) ldquoEvolution of Quality awards and self

assessment practices in Europe a case for considering organisation sizerdquo

Total quality Management 5 (4) 227-237

United Nations (1993) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

Johanson J amp Wiedersheim-Paul F (1995) The Internationalization of the

Firm - Four Swedish Cases Journal of Management Studies 20 (3) 123-139

90

Chui ACW Lloyd AE and Kwok CCY (2002) The determination of

capital structure is national culture a missing piece to the puzzlerdquo Journal of

International Business Studies 33(1) 99ndash127

Earley PC amp Gibson CB (2002) Multinational Teams A New Perspective

Lawrence Earlbaum and Associates Mahwah NJ

Gibson CB (1999) ldquoDo they do what they believe they can Group-efficacy

beliefs and group performance across tasks and culturesrdquo Academy of

Management Journal 42(2) 138ndash152

Hofstede G (1980) Cultures Consequences International Differences in

Work-Related Values Sage Newbury Park CA

SMIDO (2006)A new Vision For SMEs Development Mauritius

Government Printer Port Louis

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Stone A (1997) SMEs and Technology why should we make special efforts

to help World Bank

Bhagat RS et al (2003) Knowledge in Cross-Cultural Management in Era

of Globalization Where Do we Go from Here in D Tjosvold and K Leung

91

(eds) Cross-Cultural Management Foundations and Future Ashgate Englan

155ndash176

Cairncross F (2001) The Death of Distance Harvard Business School Press

Boston MA

Commonwealth Secretariat UK (2005) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius Commonwealth Secretariat

Drucker PF (1995) Managing in a Time of Great Change Truman Talley

BooksDutton New York

Guilleacuten M (2001) ldquoIs globalization civilizing destructive or feeble A critique

of five key debates in the social science literaturerdquo Annual Review of

Sociology 27 235ndash260

Gibson CB and Cohen SG (2003) Virtual Teams that Work Creating

Conditions for Virtual Team Effectiveness Jossey-Bass San Francisco

Grazol P et al(2004) ldquoThe Effect of Culture on IT Diffusion Email and Fax in

Japan and the US Information Systems Researchrdquo Journal of International

Consumer Marketing 16 4 pp 29-64

Greider W (1997) One World Ready or Not Crown Business New York

92

Gertler MS (1997) The Invention of Regional Culture In Lee R and Willis J

eds Geographies of Economies London Arnold

Govindarajan V and Gupta AK (2001) The Quest for Global Dominance

Transforming Global Presence into Global Competitive Advantage Jossey-

Bass San Francisco

Haire M et al(1966)Managerial Thinking An International Study Wiley

New York

Heuer M et al(1999) Cultural stability or change among managers in

Indonesia Journal of International Business Studies 30(3) 599ndash610

Hofstede G (1997) Cultures and Organizations Software of the Mind New

York McGraw-Hill

Hofstede GH (2001) Cultures Consequences Comparing Values

Behaviors Institutions and Organizations Across Nations London Sage

Publications

Hoecklin L (1995)Embedded Autonomy States and Industrial

Transformation Princeton NJ Princeton University Press

93

IBP USA (2002) Mauritius Investment and Business Guide IB Tauris and Co

LTD London

Kerr C et al (1960) Industrialism and Industrial Man Harvard University

Press Cambridge MA

Kirkman BL amp Shapiro DL (2000) ldquoUnderstanding why team members

won‟t share an examination of factors related to employee receptivity to team-

based rewardsrdquo Small Group Research 31(2) 175ndash209

Lisenda L (2003) Small and medium-scale enterprises in Botswana their

characteristics sources of finance and problems BIDPA Gaborone

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Meredith GG (ed) (2004) Small Business Management in Australia

McGraw-Hill Sydney

Mistry PS (1999) ldquoCommentary Mauritius ndash quo vadisrdquo African Affairs 98

(393) 551ndash69

Mullins LJ(ed) (1999) Management and Organizational Behavior 5th ed

London Financial Times Pitman

94

Myers MDamp Tan FB (2002) ldquoBeyond Models of National Culture in

Information Systems Researchrdquo Journal of Global Information Management

10 (1) 112-134

Putz R (2000) ldquoCulture and entrepreneurship views from the middle and

lower level managersrdquo Journal of Business Ethics 22 145- 153

Scottish Economic Statistics Scottish ExecutiveONS IDBR (2005)Size

Analysis of Welsh Business SDR 692004Statistical Press Release URN

0440

Straub D et al (2002) rdquoTowards A Theory-Based Measurement of Culture

Journal of Global Information managementrdquo 10 (1)

Schaeffer RK (2003) Understanding Globalization The Social

Consequences of Political Economic and Environmental Change Rowman amp

Littlefield Lanham MD

SMIDOA new Vision For SMEs Development(May 1996)

SMME Task Force Report (1998) Small medium and micro-enterprises task

fore force report Government Printer Ministry of Commerce and Industry

Sondergaard M amp Hofstede G (1994) ldquoA study of Reviews Citations and

Replicationsrdquo Organization Studies 15 (3) 447-456

95

Schein EH (1992) Organizational Culture and Leadership Jossey-Bass

San Francisco

Stone A ( 1997) SMEs and Technology why should we make special efforts

to help (World Bank 1997)

Statistical Press Release (2005) URN 0592 Office for National Statistics

Weisinger JYamp Trauth EM (2002) ldquoSituating Culture in the Global

Information Sectorrdquo Information Technology amp People 15 (4) 306-320

United Nations (2005) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

ix

ABSTRACT

In this new millennium few executives can afford to turn a blind eye to global

business opportunities The globalizing wind has broadened the mindsets of

executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories One such new

trajectory is the concern with national culture Whereas traditional IB research

has been concerned with economic legal issues and organizational forms and

structures the importance of national culture has become increasingly

important in the last two decades largely as a result of the classic work of

Hofstede (1980) National culture has been shown to impact on major

business activities from capital structure (Chui et al 2002) to group

performance (Gibson 1999)

The purpose of this study was to understand the concept on how to penetrate

a new international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

Data was collected through telephone interview web survey literature review

and face to face interview involving business managers legal stakeholders

and government officials and former government ministers About 17

telephone interviews were done with only government officials 4 face to face

interviews and 140 web survey interviews questions All the respondents were

x

randomly selected and respondents would suggest further participants Data

was put in to categories and themes and analysed according to those themes

Putz (2000) model was used as guide to selection of themes

Findings revealed the following 1 Language and religion are not a barrier to

foreign investment in Mauritius 2 Mauritius is a peaceful and tolerant nation

and most of its social life revolves around family and friends 3 Market

opportunities exits in the manufacturing industry offshore financial services

cyber culture and the construction industry 4 The country‟s business

economy faces stiff competition from Botswana South Africa and Vietnam 5

The government plays an important role in ensuring security for foreign

investors

From the results it was concluded that culture plays an important role in the

daily lives of the Mauritian people but it does not have a direct impact to

investment in Mauritius

1

CHAPTER ONE

INTRODUCTION

Globally Small and Medium Enterprises (SMEs) are increasingly regarded as

vital for diversifying economies through the creation of employment

(Machacha 2002 p 277) The OECD (2000) notes that small and medium-

sized enterprises account for 60-70 percent of jobs created in member

countries Southwood (2004) in discussing the status of the SME sector in

Africa observed that governments and large corporations dominated

economies of the countries yet the real engine of economic growth lay with

SMEs Muuka (2002 p 1) in discussing the SME sector in Africa noted that

the informal sector is huge due to the large numbers of employees it absorbed

as a consequence of inadequate jobs and opportunities in the formal sector

The author points out that in many African countries the informal sector is

estimated to employ from three to six times the number of employees in the

formal sector However very little has been documented through research

about this important sector

In Mauritius the Mauritian government believes that the real engine of

sustainable and equitable growth is in the SME sectors Not only is it of great

importance for the rate of job creation and income generation but also it

deserves particular attention since the sector has been largely neglected in

the past In this respect this study of Mauritius is important in addressing

some of issues of culture by using the International business as a framework

for this study to understand the business environment in Mauritius and the

potential for growth in a global perspective (Stone 1997)

2

In this new millennium few executives can afford to turn a blind eye to global

business opportunities Japanese auto-executives monitor carefully what their

European and Korean competitors are up to in getting a bigger slice of the

Chinese auto-market Executives of Hollywood movie studios need to weigh

the appeal of an expensive movie in Europe and Asia as much as in the US

before a firm commitment The globalizing wind has broadened the mindsets

of executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories

However research shows that as markets competition and organisations

globalise the business people businesses themselves and consumers

involved in these institutions increasingly have to interact manage negotiate

and compromise with people from different cultures (Hofstede 1997

Hoecklin 1995) Global business managers report that when doing business

overseas challenges mount For example structural conditions physical

social and economic arrangements can affect business operations and

outcomes as can the varied norms and behaviours that come with different

national cultures

One such new trajectory is the concern with national culture Whereas

traditional IB research has been concerned with economiclegal issues and

organizational forms and structures the importance of national culture

broadly defined as values beliefs norms and behavioral patterns of a

national group (Hofstede1980) has become increasingly important in the last

two decades largely as a result of the classic work of Hofstede (1980)

3

National culture has been shown to impact on major business activities from

capital structure (Chui et al 2002) to group performance (Gibson 1999) For

reviews see Boyacigiller and Adler (1991) and Earley and Gibson (2002)

Weisinger and Trauth (2003) report that culture evolves and takes unique

forms in local offices of organizations This means that culture is both dynamic

and situated in its local context Thus external conditions both structural and

cultural can influence global business Yet small and medium enterprise

(SMEs) managers can have an impact on how their organizations‟ cultures

evolve Therefore strategic leaders need to introduce unique norms values

and processes that fit together coherently in successful organizations

Therefore the main purpose of this case study is to explore and understand

the Small Medium Enterprise (SMEs) business environment in Mauritius and

how SMEs can penetrate the business culture there

The purpose of this paper is therefore to explore and understand how national

culture influences international business decisions and how to culture affects

international business investment using Mauritius as a case study

In this chapter the author outlines the background of the study specifies the

study objectives describes the significance of the study gives methodological

overview and finishes off by outlining definitions of key terminologies

4

11 Background to the Study

Strategically located in the Indian Ocean at the crossroads of Africa and Asia

Mauritius is reputed for its beautiful countryside and its 150 kilometres of white

sandy beaches and transparent lagoon A British colony that gained

independence in 1968 officially known as Republic of Mauritius the country is

positioned to the east of the Madagascar Islands The geographical

coordinates of the nation are 20ordm17 South latitude and 57ordm33 East longitude

The total area covered by the island nation is 2040 square kilometres

Mauritius enjoys a maritime sub-tropical climate and is therefore an all-year-

round holiday destination From a monocrop economy depending mainly on

sugar it has diversified its economic activities into textile and apparel

industry tourism and financial service Mauritius has witnessed a massive

development in the last decades (SMIDO 2006)

5

Figure 1 Map of Mauritius showing all Provinces

Source Encarta World atlas online

6

Figure 2 Mauritius map showing political divisions of the country

Source Maps of the world online

The research area was around the capital city Port Louis marked in red For

anonymity the site was just called A or B Administratively Mauritius is divided

into nine Provinces (figure 2)

The country is remarkable in its ethnic diversity It forms a unique mosaic of

immigrants from the Indian sub-continent Africa Europe and China The

cultural diversity and harmony of the island make Mauritius a unique place in

the world The various religions found on Mauritius tend to play a major part in

7

the islands cultural events and churches temples and mosques are to be

found everywhere Hindus make up approximately half of religiously affiliated

Mauritians followed by Muslims and Christianity as the minority It is also

known for its social peace political stability and racial harmony Its steady

economic growth over the years coupled with its nation‟s social cohesion and

prosperity ensure continuing development (Country Profile 2005)

The country is equipped with a highly skilled labour force to suit virtually all

business in two international languages English and French and a very good

infrastructure thereby attracting Foreign Direct Investment The average

economic growth was 56 over the last 3 years The income per Capita has

reached 4000 US Dollars As a result the standard of living has gone up The

country has now a life expectancy rate of 714yrs an adult literacy rate of 83

(Country Profile 2005)

To face globalisation and a new economic environment the Government has

taken several steps High value-added capital intensive and knowledge-

based activities are on the priority list The Information Technology sector is

undergoing rapid changes so as to be fit for the next millennium The aim is to

make Mauritius a centre for high-tech and software services which can be

exported (Commonwealth Secretariat 2006)

8

12 An Overview of Mauritian Economy

The economy of Mauritius has experienced major structural transformation

over the last two decades The country has moved away from a mono-crop

economy with fast population growth high unemployment and low per capita

income to one that is more dynamic and diversified The sources of

diversification have been agriculture export manufacturing (mainly textile)

tourism and more recently international services with Offshore and Freeport

activities (Country profile 2005)

To respond to the global competition in these sectors Mauritius has made

extensive use of modern technology to improve its productivity and efficiency

The real growth rates have been around 54 over the past four years and

Mauritius is now classified as a middle-income country and is one of the

healthiest economies in the whole African region (Country profile 2005) The

sugar sector provided the start-up capital for the Export Processing Zones

(EPZ) The rapid rate of growth of investment in the manufacturing sector

(investment grew by over 30 each year from 1983 until the late 1990s in this

sector) that led to the success of the EPZ and the Mauritian economy as a

whole This was made possible by the confidence of entrepreneurs and

foreign investors prevailing in the country at that particular time The private

sector accounts for approximately 70 of total capital formation in Mauritius

Investment rate stood around 27 in the four years ending 1996 peaking to

30 in 1994 (SMIDO 1996)

9

When the government recommended the diversification of the economy with

the creation of Export Processing Zones in the early 1980‟s the EPZ sector

benefits from duty-free and quota free access into European Union markets

granted under the Lomeacute Convention as well as tariff preferences granted

under the General System of Preferences (GSP) by countries such as North

America and Japan The mid 1980s witnessed a textile boom raising per

capita incomes and living standards However the conclusion of the Uruguay

Round (General Agreement on Trade amp Tariffs) implies the loss of guaranteed

markets and preferential access which will result in strong competition in

these respective markets (Country profile 2005)

The new strategy of the industrial sector aims at targeting high quality and

high value added products with a view to restoring the competitiveness of the

goods by applying latest technology to the manufacturing industry and hence

improving the quality of the finished products Limited data is available

regarding the SME sector in Mauritius The current research has observed

that there is little research in the field in SME sector in Mauritius

In view of the importance of foreign investment as a source of sustenance to

economic growth the government of Mauritius has taken a series of policy

measures to encourage its flows into manufacturing offshore banking and

financial services information technology communication and tourism As far

as foreign investors are concerned Mauritius offers itself as an attractive

destination because several positive features such as political stability

10

availability of skilled labour and investment-friendly rules and institutions

(Stone 1997)

With such a promising economy there is virtually no evidence on how to

penetrate the business culture in Mauritius and how culture can affect SMEs

and business opportunities therefore this study will explore and understand

the business environment in Mauritius and the challenges of doing business

there as a foreign investor Currently there is very little research done on

SMEs and culture in Mauritius

13 Mauritius SME Background

Experience shows that attitudes towards small business vary from decade to

the next from country to country Before the industrial revolution all business

was small business but with industrial and commercial expansion of

developed nations small has become medium and medium has become big

business

Business owners and managers have often seen growth as an end in itself

and at time the cry get big or get out has been heard in most nations

(Meredith 2004) For more than two decades SMEs have experienced

favourable growth SME has long been prominent in the countrys economy

and make up a large portion of national economy in terms of output

employment and effective utilisation of regional resources Small and medium

enterprises in Europe make up 998 of all European enterprises provide

66 of its jobs and account for 65 of its business turnover (Meredith 2004)

11

In developing countries SMEs account more than 90 of all enterprises

Over the last five years they have been responsible for more than 80 of job

created (Stone 1997) On the issue of job creation Stone (1997) found that

SMEs create more employment than large enterprises and with a lower

investment per job created SMEs are not usually associated with international

activity but they do in fact play a significant international role and their

importance appears to be increasing Available data on SMEs international

activity are very limited (Stone 1997)

In general terms and depending on the country SMEs contribute between

15 and 50 of exports and between 20 and 80 of SMEs are active

exporters Overall it is estimated that SMEs now contribute between 25 and

35 of world-manufactured exports (UN 2005) Increased exports not only

boost the level of sales and employment but also extend the life cycle of

goods and services

In Mauritius SMEs represent 19 according to a report issued by the

Commonwealth Secretariat entitled a Study of Small Firm export Policies

and Institutions in Mauritius Subsequently these SMEs have developed

gradually and move from their tradition orientated operations to export-led

firms probably due to improvement of technology in the field of communication

and the new economic dimension which prevailed

At this juncture it is important to report that few studies on culture and small

and medium entrepreneurship have been conducted on Sub-Saharan Africa

12

There is a paucity of information and even those scarce studies they do not

cover broad perspectives of the situation of SMEs in Sub-Saharan Africa

Therefore this study builds upon the existing limited body of research

regarding how business cultures contribute to the success or failure of small

and medium entrepreneurs In particular it explores the business culture in

Mauritius and its barriers to penetration for new and foreign small and

medium entrepreneurs

14 Purpose Statement

The purpose of this study was to understand the concept on how to penetrate

an international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

15 Aims and Objectives

To investigate the challenges of national cultural differences in

business in Mauritius

To investigate how to penetrate the business environment for a new

and or foreign business culture especially in Mauritius

To investigate business opportunities for SMEs in Mauritius and how

these can benefit the locals

13

16 Research Question

How can Small and Medium Enterprises penetrate the business culture in

Mauritius

These sub-questions all pertain to SMEs business

o 161 SUB-QUESTIONS

What kind of businesses are operating in Mauritius now

What are their business strategies (marketing brands) etc

What are the necessary mechanisms for establishing business in

Mauritius

What are the business needs of established and starting businesses

What are the mechanisms for potential growth of local business

What are the challenges for doing business in Mauritius

How much of business behaviour is influenced by the national culture

17 The Significance of the Study

The findings of the current study will increase the understanding of cultural

barriers to market penetration for SMEs in Mauritius The study adds

knowledge to the body of literature in this area focusing at further

improvement of understudying of culture and business issues The

study becomes part of the universitys education development in line with its

obligations to the communities and the country This research problem arose

from an information need of a particular client This research therefore will try

to explore the client‟s information need and probably contribute to the wealth

of knowledge

14

18 Definitions

CULTURE Hofstede (1997) defines culture as ldquothe collective programming of

the mind which distinguishes the members of one group or category of people

from anotherrdquo It is the norms beliefs and values common to a society

Culture is about the way people understand their world and make sense of it

It only when this is taken for granted assumptions are challenged that people

realise that they even exist (Hofstede 1997)

ENTERPRISE An enterprise is considered to be any entity engaged in an

economic activity irrespective of its legal form This includes in particular

self-employed persons and family businesses engaged in craft or other

activities and partnerships or associations regularly engaged in an economic

activity (European Commission 2003)

INTERNATIONAL BUSINESS International business consists of transactions

that are devised and carried out across national borders to satisfy the

objectives of individuals and organizations The Primary Types of International

Business Activities Are Importing and Exporting Direct Foreign Investment

(Govindarajan and Gupta 2001)

GLOBALISATION refers to a bdquogrowing economic interdependence among

countries as reflected in the increased cross-boarder flow of three types of

entities goods and services capital and knowhow‟ (Govindarajan and Gupta

2001 4)

15

SMALL AND MEDIUM INTERPRISES (SME) is made up of enterprises

which employ fewer than 250 persons and which have an annual turnover not

exceeding EUR 50 million andor an annual balance sheet total not

exceeding EUR 43 million (European Commission 2003)

In Mauritius an SME has been redefined taking into account the volume of

investment in equipment which was previously one million up to 10 millions

Mauritian Rupees presently to be classified as a small enterprises and with

less than 50 and 200 employees for small and medium scale respectively

(Stone 1997)

16

CHAPTER TWO

LITERATURE REVIEW

The aim of this chapter is to introduce conceptual themes that are important in

order to understand the role of culture in international business The chapter

discusses the context of relationship between culture and international

business practices in small and medium enterprises (SMEs) and the major

challenges they face in the area of globalisation A model adopted from Putz

(2000) forms a framework for articulating the conceptual role that culture has

in international business using Mauritius as a case study

21 Embracing Cultural change in an era of globalization

A significant theoretical issue for international business is the role of culture in

the whole aspect of information transformation Since the landmark study by

Haire et al (1966) and the publication of Industrialism and Industrial Man by

Kerr et al (1960) researchers have continued to search for similarities in

culturally specific beliefs and attitudes in various aspects of work related

attitudes as well as consumption patterns and other behaviours If cultures of

the various communities of the world are indeed converging (Heuer et al

1999) International Business (IB) related practices would likely become

increasingly similar For example standard culture-free business practices

would emerge and inefficiencies and complexities associated with divergent

beliefs and practices in the past era may disappear (Heuer et al 1999)

17

Studies elsewhere suggest that culture gets affected by globalization practices

in the current 21st century Globalization has seen flows of information

technology money and people and is conducted via international

government organizations such as the African Union the North American

Free Trade Agreement (NAFTA) and the European Community global

organizations such as the International Organization for Standardization

(ISO) multinational companies (MNCs) Also includes cross-boarder alliances

in the form of joint ventures international mergers and acquisitions These

interrelationships have enhanced participation in the world economy and

have become a key to domestic economic growth and prosperity (Drucker

1995 153)

Literature suggests that because globalization tends to redistribute economic

rewards in a non-uniform pattern a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) Strong opposition to

globalization usually originates from developing countries that have been

affected by the destabilizing effects of globalisation However in recent years

there have been heated debates in Western economies triggered by

significant loss of professional jobs as a result of offshoring to low wage

countries (Schaeffer 2003)

Workers in manufacturing and farming in advanced economies are becoming

increasingly wary of globalization as their income continues to decline

18

significantly In parallel to the angry protests against globalization the flow of

goods services and investments across national boarders has continued to

fall after the rapid gains of the 1990s The creation of regional trade blocs

such as NAFTA the European Union and the Association of Southeast Asian

Nations have stimulated discussions about creating other trade zones

involving countries in South Asia Africa and other parts of the world

Although it is often assumed that countries belonging to the World Trade

Organization (WTO) have embraced globalization the fact is that the world is

only partially globalized at best (Schaeffer 2003)

Many parts of Central Asia and Eastern Europe including the former

republics of the Soviet Union parts of Latin America Africa and parts of

South Asia have raised heightened scepticism about globalization (Greider

1997) In fact less than 10 of the world‟s population are fully globalized (ie

being active participants in the consumption of global products and services)

(Schaeffer 2003)

According to Guile`n (2001) these trends might indicate that globalization is

being impeded by tendencies towards country-specific modes of economic

development making the convergence of IB-related values and practices

difficult to achieve Hofstede (1980)‟s favourite definition of f ldquoculturerdquo is

precisely that its essence is ldquocollective mental programmingrdquo it is that part of

peoples conditioning that they share with other members of their nation

region or group but not with members of other nations regions or groups

Hofstede (2001) asserts that these mental programs of people around the

19

world do not change rapidly but remain rather consistent over time His

findings tend to suggest that cultural shifts are relative as opposed to

absolute Although clusters of some countries in given geographical locales

(eg Argentina Brazil Chile) might indicate significant culture shifts towards

embracing Anglo values the changes do not diminish the absolute differences

between such countries and those of the Anglo countries (ie US Canada

UK)

According to Hofstede (1980) Examples of differences in mental

programming between members of different nations can be observed all

around us One source of difference is of course language and all that

comes with it but there is much more In Europe British people will form a

neat queue whenever they have to wait not so the French Dutch people will

as a rule greet strangers when they enter a small closed space like a railway

compartment doctor‟s waiting room or lift not so the Belgians Austrians will

wait at a red pedestrian traffic light even when there is no traffic not so with

the Dutch Swiss tend to become very angry when somebody-say a foreigner

makes a mistake in traffic not so with the Swedes All these are part of an

invisible set of mental programs which belongs to these countries‟ national

cultures Such cultural programs are difficult to change unless detaches the

individual from his or her culture Within a nation or a part of it culture

changes only slowly (Hofstede 1980)

20

This is the more so because what is in the minds of the people has also

become crystallized in the institutions namely government legal systems

educational systems industrial relations systems family structures religious

organizations sports clubs settlement patterns literature architecture and

even in scientific theories All these reflect traditions and common ways of

thinking which are rooted in the common culture but may be different for other

cultures (Hofstede 1980)

22 The dynamics of Culture as a Multi-level Multi- layer construct

Multi-level approaches of viewing culture as a multi-level construct that

consists of various levels nested within each other from the most macro level

of a global culture through national cultures organisational cultures group

cultures and cultural values represented the self aspect of the individual See

figure 3

21

Figure 3 The dynamic of top-down-bottom up process across levels of

culture (Source Schein 1992)

The model proposes that culture as multi-layer construct exist at all levels

from global to the individual Changes that take place at the external layer of

behaviour are most likely shared by individuals who belong to the same

cultural background level hence characterising the aggregated unit (Schein

1992)

Top-

Down

Individual

Behaviour

Values

Assumptions

Global Culture

National Culture

Organizational Culture

Group Culture

Bottom

Up

22

Below the global level are nested organizational layers or networks at the

national level with their local cultures varying from one nation or network to

another Further down are local organizations and although all of them share

some common values of their national culture they vary in their local

organizational cultures which are also shaped by the type of industry that

they represent the type of ownership the values of the founders etc Within

each organization are sub-units and groups that share common national and

organizational cultures but differ from each other in their unit culture based on

differences in functions of their leaders‟ values and the professional and

educational level of their members At the bottom of this structure are

individuals who through the process of socialization acquire the cultural values

transmitted to them from higher levels of culture Individuals who belong to the

same group share the same values that differentiate them from other groups

and create a group-level culture through a bottom-up process of aggregation

of shared values (Schein 1992)

Both top-down and bottom-up processes reflect the dynamic nature of culture

and explain how culture at different levels is being shaped and reshaped by

changes that occur at other levels either above it through top-down

processes or below it through bottom-up processes(Schein 1992) Similarly

changes at each level affect lower levels through a top-down process and

upper levels through a bottom-up process of aggregation The changes in

national cultures observed by Inglehart and Baker (2000) could serve as an

23

example for top-down effects of economic growth enhanced by globalization

on a cultural shift from traditional values to modernization

In view of the complexity of the organizational structures specific

organizational structures that have global character need to be established so

as to adopt common rules and procedures in order to have a common

bdquolanguage‟ for communicating across cultural borders (Kostova 1999 Kostova

and Roth 2003 Gupta and Govindarajan 2000)

Given the dominance of Western Multi National Companies (MNCs) the

values that dominate the global context are often based on a free market

economy democracy acceptance and tolerance of diversity respect of

freedom of choice individual rights and openness to change (Gupta and

Govindarajan 2000) The multi-level structure explains how a lower-level

culture is being transformed by top-down effects and that the cultural layer

that changes first is the most external layer of behaviour In the long run

bottom-up processes of shared behaviours and norms would affect the local

organizational culture as well (Schein 1992)

23 International Business and Culture

Knowledge of cultural differences is one of the key components in

international business practices and success Improving levels of cultural

awareness can help companies build international competencies and enable

individuals to become more globally sensitive (Hofstede 2003) Indeed

cultural differences contribute towards different ways people behave in

24

business Research in the field of international management underscores that

the attributes of cultural knowledge used by a firm play an important role in the

firms expansion For example Martin and Salomon (2003) found that cultural

orientation in entrepreneurial action is a central theme and can serve as a

starting point for immigrant business

ldquoUnderstanding the culture and the conceptualisation of culture in conjunction with entrepreneurial action is a critical issue when doing business in an international environment Contributions of economic geography inspired by the cultural turn which shows alternative ways of thinking about the connection between culture and economy by using a new understanding of culture are also critical (pg 198)rdquo

The statement underscores the important of understanding the culture of a

society before attempting to do business there otherwise the company runs a

risk of going out of business The ways in which different groups of people

interpret their environment and organise their activities is based the on the

specific cultural values and assumptions Certain values often thought to be

universal really do differ from culture to culture What constitutes an ethical

business practice is not the same everywhere This can be an enormously

difficult area in managing business across cultures (Straub et al 2002)

Although one may claim cultural differences to be going away they are

actually being absorbed in the business practices This makes it more critical

than ever to try to understand different cultures and their influence on the

ways people do business and view the world The costs of not understanding

are getting greater than ever The essence of culture is not what is visible on

the surface It is the shared views about what people understand and interpret

25

the world These cultural differences are crucial influences on interactions

between people working and managing across culture (Gertler 1997)

The social behaviour of a society is embedded in a particular context and is

connected to other deeply held values and beliefs (Weisinger and Trauth

2003) This means that the stakes are high for mismanaging cultural

differences Ignoring or mishandling differences can result in an inability to

retain and motivate employees a misreading of the potential of cross-border

alliances marketing and advertising blunders and failure to build sustainable

sources for competitive advantage Mismanaging cultural differences can

render otherwise successful managers and organisations ineffective and

frustrated when working across cultures (Weisinger and Trauth 2003)

24 Putz Model For Immigrant Business and Culture

Literature in the field of Immigrant Business differentiates mainly between two

basic approaches each with a different emphasis which are combined to

explain entrepreneurial action of immigrants (Putz 2000) The first approach

emphasis the bdquoopportunities‟ offered by the host country including access to

the market and job market conditions The second approach focuses on the

bdquoresources‟ of migrant groups from whom the concept of culture becomes

essential (see Figure 1 below)The Putz (2000) cultural model below is a

summary of explanatory approaches following the assumption that self

employment of certain groups is the result of their specific cultural

predisposition which favours business activity

According to Putz‟s (2000) view of cultural model the bdquoopportunities‟

approach which refers to market possibilities as an explanation for self

26

employment of immigrants assume that there are certain market segments

with favourable development perspectives especially for immigrant groups

Here two factors receive special attention which are niche markets and legal

and institutional frameworks Niche markets make the establishing of business

by immigrants easier because their needs for consumer goods create specific

demand Legal and institutional frameworks gain awareness in international

comparative studies through restrictions specified by a country regarding

business permits and regulations these frameworks influence both the extend

and the sectored structure of the bdquoimmigrant business‟ (Putz 2000)

According to Putz (2000) the observation that most immigrant groups show a

higher level of self employment rate than others often forms the background

explanation which focus on opportunities created by the host society

Resource models stress the shared characteristics of migrants of same origin

Resources models explain that certain groups have specific cultural

resources which make it easier for members of that group to become self

employed therefore one can distinguish between the cultural traditions and

socialethnic networks ( Putz 2000)

27

Figure 4 Dominating models concept of bdquoImmigrant Business‟ (Source Putz

2000)

OPPORTUNITIES

Market Access

Possibilities

Market Conditions

Niche Markets

lsquoOpenrsquo Markets

Job Market

Conditions

Access

Vertical Mobility

Legal and Institutional

Frameworks

lsquoEthnicrsquo

Business

RESOURCES

lsquoClass Resourcesrsquo lsquoCultural Resourcesrsquo

Cultural

Traditions

Social lsquoEthnicrsquo

Resources

28

When successfully managed differences in culture can lead to innovative

business practices faster and better learning within the organisation and

sustainable sources of competitive advantage (Sondergaard and Hofstede‟s

1994) In relation to that the current study argues that managers need to

study and understand the culture and the niche market before investing This

assumption has been raised as a result of the previously reported experiences

and research findings already reported so far It is therefore critically important

to understand that every society has got its own way of behaving which needs

to be understood if the business is to succeed Operating companies need to

understand what their business means to the people of the given community

and their culture

Several studies of international business have indicated that

internationalization of the firms is a process in which the firms gradually

increase their international involvement(Johanson amp Wiedersheiml 1995

Gibson 1999 Chui et al 2002 ) It seems reasonable to assume that

within the frame of economic and business factors the characteristics of this

process influence the pattern and pace of internationalization of firms Figure

5 below shows a model of the internationalization process of the firm that

focuses on the development of the individual firm and particularly on its

gradual acquisition integration and use of knowledge about foreign markets

and operations and on its successively increasing commitment to foreign

markets The basic assumptions of the model are that lack of such knowledge

is an important obstacle to the development of international operations and

that the necessary knowledge can be acquired mainly through operations

abroad (Johanson and Wiedersheiml1995)

29

FIGURE 5 The Basic Mechanism of Internalisation- State and Change Aspects

Figure 5 Basic Mechanism of Internalisation (Source Johanson amp

Wiedersheiml 1995)

Market knowledge and market commitment are assumed to affect both

commitment decisions and the way current activities are performed These in

turn change knowledge and commitment ( Aharoni 1966) In the model it is

assumed that the firm strives to increase its long-term profit which is

assumed to be equivalent to growth (Williamson 1966) The firm is also

striving to keep risk-taking at a low level These strivings are assumed to

characterize decision-making on all levels of the firm Given these premises

and the state of the economic and business factors which constitute the frame

in which a decision is taken the model assumes that the state of

internationalization affects perceived opportunities and risks which in turn

influence commitment decisions and current activities (Johanson amp

Wiedersheiml 1995)

Market

Knowledge

Market

Commitment

Commitment

Decisions

Current

Activities

30

2 5 The Role Of Information Communication Technologies

Hofstede (2001) observed that not only will cultural diversity among countries

persist but also new technologies might even intensify the cultural differences

between and within countries Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

Information communication technologies (ICTs) enable users to access varied

amounts of information globally however it does not necessarily increase

their capacity to absorb the information at the same rate as the information is

disseminated or diffused (Bhagat et al 2002) In addition information and

knowledge are interpreted through cultural lenses and the transfer or diffusion

of organizational knowledge is not easy to accomplish across cultural

boundaries (Bhagat et al 2002)

Ethnic groups around the world observe the lifestyles and cultural values of

other countries and some are interested in adopting part of the lifestyle and

values but others reject it completely (Kirkman and Shapiro 2000) The

effects of new technologies on improving efficiencies of multinational and

global corporations are well known but it is not known how these new

technologies especially computer-mediated communication and the Internet

31

might create significant shifts in the cultural patterns of different ethnic groups

(Kirkman and Shapiro 2000) or on their ways of doing business

In essence there in need to explore how the spread of ICTs is affecting the

progress of globalization in different parts of the world by incorporating the

role of cultural syndromes organizational cultures and other processes

which has recently been attempted by scholars such as Bhagat et al (2003)

and Gibson and Cohen (2003)

Information and Communications Technology (ICT) has become a catchword

with different interpretations and viewpoints even among experts As the

name suggests ICT encompasses all the technology that facilitates the

processing transfer and exchange of information and communication

services In principle ICTs have always been available since the advent of the

printing press The only difference is that from the late twentieth century rapid

advances in technology changed the traditional ways in which information was

processed communications conducted and services available (Adu 2002)

These technological advances have changed business operations and the

way people communicate They have introduced new efficiencies in old

services as well as numerous new ones One could even imagine going as far

as replacing the term Post-industrial Society with ldquoInformation Society that

is a society where the ability to access search use create and exchange

information is the key for individual and collective well-being (Kaplan 2001)

32

Globally entrepreneurship is considered as the engine of economic

development The SME sector has the potential to address socio-economic

challenges facing both developing and developed countries Without small

business development it is argued that economies stagnate unemployment

levels continue to rise and the general standard of living deteriorates

Information and communications technology (ICT) has been identified as a

major area of need to develop the SME sector in areas of information

provision access to national and international markets and other areas of

business development and support ( Ferrand and Havers 1999)

ICTs enable entrepreneurs to manage their businesses efficiently and thus

enhancing their competitiveness in the global market They can increase their

geographic reach improve efficiency in procurement and production and

improve customer communications and management For these reasons the

need to encourage and accelerate the uptake and optimal application of ICTs

by SMEs in different sectors of the economy cannot be overemphasized

(Ramsay et al 2003) The ICT sector has the potential to absorb prospective

entrepreneurs considering various business opportunities offered by the

sector Some of the business opportunities available within the sector relate to

systems integration application development database administration web

design and internet service provision The sector is also seen as an area with

major opportunities for the historically disadvantaged sectors of the

population It therefore becomes imperative for government to provide

mechanisms to accelerate the entry of SMMEs into the ICT sector (ILO 2001)

33

26 Cross Culture and International Business

Cross-cultural management advice rests on several assumptions in the

tradition of Hofstede (1997) that a) that national culture is comprised of norms

and values that can be readily identified and addressed b) that these norms

values and patterns of behaviour are stable and change at an extremely slow

pace and c) that national culture predominates over organizational culture

epistemic culture gender or other determinants of attitudes and behaviour

According to Hosftede (1997) national culture is comprised of norms and

values that can be readily identified and addressed

Organisational culture (common values and attitudes) affects organizational

success and innovation develops over time and may be difficult to change

ldquoThere is a relationship between an organization‟s culture and its

performance The pervasive nature of organizational culture means that if

change is to be brought about successfully this is likely to involve changes to

culturerdquo (Mullins 1999)

An alternative view sees culture as more complex context-specific and

dynamic For example Weisinger and Trauth (2003) examined the interaction

of national cultures the IT industry culture and a particular firm‟s

organizational culture They observed that the resulting situated culture ldquois

fluid contextually dependent and created by actors within a group who may

hold conflicting assumptions and world viewsrdquo In other words culture is as

what it is because of what it does This means that management must ensure

34

that key capabilities for example marketing analytics or process controls are

developed and nurtured across the organization

Successful global managers recognize that they cannot respond to every

unique opportunity that local settings offer Thus there is an inherent tension

in cultural sensitivity a management team which is ldquotoo sensitiverdquo to cultural

and structural features exposes the organization to the risks that come with a

lack of focus and coherence while managers who do not take cultural and

structural features into account expose the organization to the risks that come

with organizational rigidity (Myres and Tan 2002)

According to Mistry (1999) entrepreneurial networks and clusters in sub-

Saharan Africa have not generally produced the kind of strong transnational

links that characterize Asia‟s flourishing pattern of industrial diffusion The

author states that the reasons for this are complex differences in geography

different models provided by leading countries in the neighbourhood and

policies adopted by governments in the respective regions Chinese business

networks are responsible for some of the information ideas and capital that

helped launch the small Indian Ocean nation of Mauritius as an important

centre for export-oriented industry The Chinese networks in Mauritius also

continue to facilitate a role that Mauritius first began to play in the eighteenth

century they serve as a gateway for overseas Chinese entrepreneurs

interested in investing both in Mauritius and elsewhere in Africa (Mistry 1999)

35

27 Investing in Mauritius

There are a lot of advantages in investing in Mauritius The economy of the

country is stable and the graph of the economy and business is one the rise

for a considerable period of time The Mauritius government has undertaken a

sequence of strategic measures to support its course into offshore banking

manufacturing and financial services communication technology and tourism

keeping in mind the significance of foreign investment as a basis of

nourishment of the financial development (Dabee and Greenaway 2001)

According to Dabee and Greenaway (2001) tthere are various factors that

influence financiers to invest in Mauritius like accessibility of skilled labor

political constancy and venture-friendly institutions and regulations One of

the major factors for the development of Mauritius is the Foreign Direct

Investment (FDI) The government of Mauritius has given all the necessary

support to create the most favorable investment setting by the following steps

Building modern infrastructure

Endorsing suitable legislations

Commencing packages of investment inducements

Investing in human capital

Some of the advantages of investing in Mauritius are as follows

High-quality infrastructure with superb transportation

Democracy and a steady government

Free market financial system fastened on export slanting activities

Excellent system of sea and air transport

36

High standard of living good international schools

A highly educated bilingual and responsive work force

Knowledgeable financial segment providing outstanding services

Constructive market contact and good inducements ( IBP 2002)

Mauritius has various sectors where investment can be made like Information

and Communication Technology and manufacturing For doing business in

Mauritius registered trademark is required The trade marks for business are

issued by the registered Patents and Trademarks sector of Ministry of Foreign

Affairs International Trade and Cooperation In the country of Mauritius a

foreigner is eligible to hold 100 shares In this case one of the directors of

the company has to inhabit in Mauritius and the foreign individual has to

obtain a sanction from the Office of Prime Minister (IBP 2002)

In Mauritius the laws concerning income tax is based on the English law of

income tax The companies in Mauritius are lawfully accountable to pay out

income tax on their profits at an even rate of 25 A company which is

included in the country or has its scheming benefit in the country is measured

for tax reasons to be an occupant corporation To the Mauritius companies

various types of tax incentives are granted The companies that hold

certificate for Tax inducement are responsible to tax at an abridged rate of

15 while the scheduled companies are accountable to pay tax at the rate of

25 ( Dabee and Grrenaway 2001)

37

CHAPTER THREE

METHODOLOGY

Having looked at culture to some depth this chapter explains the methods

used in carrying out the study The study used mixed method approach to

allow for data corroboration and dynamism since the subject in question

needed dynamism and sensitivity in approach

This research mixed both qualitative and quantitative approaches to try and

get best possible research by combining both features because they

complement each other Quantitative data techniques condense data in order

to get a bigger picture whereas qualitative techniques are data enhancers

making it possible to see issues more clearly (Dawson 2002 Neuman 2000)

Attempt was made to keep in line with recommendation made in the Leeds

Declaration proposition number 6 which calls for the application of multiple

methods and perspectives to try and understand social and cultural issues

(Hunter and Lang 1993) Mixing qualitative and quantitative methods also

called positivist and interpretive respectively (Gilbert 2001 and Bowling 2002)

is effective in a complex issue study such as this one because they highlight

different perspectives of the same problem in this case - the public in parallel

with the individual level(Gilbert 2001) This is because quantitative methods

adopt a numerical approach to data collection and analysis to provide macro

level perspective whereas qualitative methods provide micro level perspective

through collecting data from individuals (Ibid)

38

There was also use of impersonal (public) documentation using official

records which were more library based research (Grbich 1999) on top of

theory generating field based methods (Ibid) Many researchers (Bowling

2002 Neuman 2000 Grbich 1999 Denscombe 2003 and Gilbert 2001)

concur that neither of the methods is superior to the other but just different

each having its strengths and weaknesses (Dawson 2002)

The study sought to explore the attitudes behaviour subjective meanings and

experiences of the participants making qualitative approaches best suited

because they emphasize the importance of context (Neuman 2000) However

to generate objective and factual (Maynard and Purvis 1994) statistical

figures quantitative research was more suitable Hence mixing of methods

(Dawson 2002 Denscombe 2003) to counteract weaknesses in both

approaches to give breadth and width to the study (Maynard and Purvis

1994) The flexibility of qualitative research allowed for re-focusing and

refinement of the tool dependent on participants‟ reactions throughout

(Neuman 2000) to pick up any emerging evidence thus applying the

grounded theory approach (Dawson 2002)

39

31 Research Setting

Mauritius is a volcanic island of lagoons and palm-fringed beaches in the

Indian Ocean Southern Africa east of Madagascar with a population of

about 12 million has a reputation for stability and racial harmony among its

mixed population of Asians Europeans and Africans The island has

maintained one of the developing worlds most successful democracies and

has enjoyed years of constitutional order since independence in1968 Over

the past three and half decades the country has been transformed from one

of the poorest in the world to a middle income country with per capita Gross

Domestic Product US $7000 (World Bank 2006) It has preserved its image

as one of Africas few social and economic success countries that mainly

depends on sugar and clothing export and a centre for upmarket tourism But

Mauritian exports have been hit by strong competition from low-cost textile

producers and the loss of sugar subsidies from Europe Consequently

attention has turned to diversification in line with global trends

To this end SMEs have been identified as important instruments to achieve

economic diversification Today the government vigorously supports SMEs

through a range of strategies eg the creation of a business friendly climate

via import liberalisation tax reforms and the launch of the SME Partnership

fund which gives subsidized loans to aspirant SME owners and makes the

availability of finance and facilitating access in particular for those enterprises

that have viable projects but are short of equity The Small Enterprises amp

Handicraft Development Authority (SEHDA) was created following the merger

of the Small amp Medium industries Development Organisation (SMIDO) and the

National Handicraft Promotion Agency (NHPA) The aim of the merger is to

40

rationalize and optimize the use of resources dedicated to the small business

sector in Mauritius

Various cultures and traditions flourish in peace though Mauritian Creoles

descendants of African slaves who make up a third of the population live in

poverty and complain of discrimination Mauritius was uninhabited when the

Dutch took possession in 1598 Abandoned in 1710 it was taken over by the

French in 1715 and seized by the British in 1810 The culture of the country

reflects its diverse ethnic composition There are many religious festivals

some important ones being (in random order) Divali (the hindu festival of

lights in October) Christmas Cavadee (a penitence festival of the south

Indian tradition of hinduism in January) Eid ul Fitr (celebrating the end of the

period of fasting in Islam As the Islamic calendar does not correspond to the

Gregorian calendar the date of its celebration in the year tends to vary In

2003 it was celebrated in November) With such a strong history diverse

culture and such a promising economy painted above makes Mauritius a rich

setting to investigate culture and small medium business entrepreneurship

32 Methods

As justified already this study applied method mix to exploit the benefits of all

methods used while minimising the effects of their weaknesses The obvious

benefit of method mix is that it involves more data which is likely to improve

the quality of research (Denscombe 2003) and that is what the researcher

sought to achieve In deciding which method to use it was acknowledged that

the chosen methods were not superior in any way but more suited to the study

41

circumstances based on the premise of ldquohorses for courses (Denscombe

2003 page 83)

A Questionnaire used in the online web survey allowed for collection of

data from large numbers of participants economically since the project had

financial and time limitations (Ibid) The other advantage of survey exploited is

generation of quantitative data However weaknesses of the method

(empiricism lack of depth and accuracy of responses) were a challenge The

questionnaire was open ended and was completed by the participant in the

absence of the researcher Any questions arising from the participant not

understanding or misinterpreting the question where not taken care of Focus

groups were used to gain depth into some of the emerging issues from

questionnaires to gain insights into the issues surrounding widow inheritance

and to validate some of the data (Denscombe 2003) Telephone and face to

face interviews were used to gather to gain in-depth information on the

issues

All accessible literature on culture and investment in Mauritius as well as

other parts of Africa was reviewed to get insight into any related work to

identify key issues and current knowledge gap so as to sign post this study for

any audience (Ibid)

42

33 Research Participants and sampling

It was difficult to get exact demographic data for each sector Consequently it

was not possible to use any scientific sampling techniques The study

therefore used non-probability sampling (Neuman 2002 Bowling 2002

Denscombe 2003) targeting urban based population

The sample baseline characteristics were

SME managers from aged 18 years and above and over 65 was the

limit Any religion faith Any socio-economic background and residents

of Port Luis and surrounding areas

To sample for quantitative data purposive and snowballing sampling

techniques were used because it was not possible to apply any statistical

formula in getting the samples since there was no single list of SME managers

and other stakeholders to use with any form of probability sampling

Participants were snowballed from one sector to another until the whole

sectors were covered For the focus groups homogenous and critical case

(Grbich 1999) sampling was used to get particular sub group to provide

details In this case to get government officials and the private sector who

were strong enough to talk about their experiences

A total of 161 participants were reached from all the sectors These included

SME manager government officials and the private sector The researcher

wishes to point out that these numbers were not conclusive The numbers

could be much higher because in case the researcher phoned the participants

they were not available to take the call there was no time to go back to

43

ascertain the details Those who were not willing to take part in the study were

also excluded from the above figures For the focus groups discussions 5

government officials and the private widows were invited and used Skype

technology to do a conference

The times when the participants were contacted met were entirely dependent

on participant availability and other events at the time (Gilbert 2001) It varied

between 800 am and 700 pm in the evening because of the time differences

UK and Mauritius time Care was taken to avoid compromising times such as

late in the evening or culturally sensitive days such as weekends when people

were engaged in funerals and church services in this case

The participants showed weariness towards the study because as they put it

ldquoa lot of people come along claiming to collect data to help but never show up

againrdquo

34 Data collection Instruments

The researcher developed an online quantitative data collection questionnaire

(web survey form) which was posted on the university web server with help of

the department technicians A multiple recipient list was created from the

details in the SEHDA website and was randomly sent to the recipients These

only included the SME managers from the seven sectors About 20 contacts

were selected from each sector which made a total of 140 participants

Telephone interviews were made to about 17 government officials and the

private sector who were later divide n to focus groups and a teleconferencing

44

was organised on Skype Face to face interviews were done with government

officials from the Mauritian High Commission in the UK

Apart from the questionnaire an Olympus VN 2100 PC Digital Voice Recorder

was also used during the focus group discussion with the permission of

participants also on telephone interviews and face to face interviews This

was tested set and correctly positioned by the telephone speaker before the

session began to ensure proper functioning It was fitted with a mini

microphone to improve recording quality The digital voice recorder small in

size (only 68 grams in weight) proved user friendly because it was not

intruding too much into the face of participants as opposed to older recording

devices There was a pair of AAA batteries on standby in case the batteries in

use ran flat during the session

35 Ethical Considerations

This study involved very little of sensitive issues but it strived very much to

adhere to the fundamental principles of Human Research Ethics of Respect

for Persons Beneficence and Justice The researcher ensured autonomy self

determination and protection of vulnerable persons through informed consent

participation confidentiality and thorough explanation of what the research

was all about to those with limited knowledge and education Any risk that

might have resulted from the study was minimised as much as practically

possible and the researcher took full responsibility for the protection of

participants There was no form of discrimination other than on participant

baseline characteristics

45

The study also upheld the six key ethical research principles as stipulated by

ESRC - UK (ESRC 2005) To ensure anonymity pseudonyms were used for

participants The information gathered was safely protected through password

use on the computer system and only the researcher had access to the

information The researcher was responsible for storage and destruction of

any information no longer needed such as audio files after transcription

Research respondents participated in a voluntary way free from any coercion

and free to withdraw at any point should they felt uncomfortable

The first ethical committee whose approval was sought was the University of

Sheffield Ethical committee after which the researcher sought ethical approval

from Mauritian authorities through the relevant ministries It was not straight

forward getting ethical approvals in Mauritian but ultimately the ministry of

SMEs approval was obtained

36 Procedure

After all the necessary approvals were obtained the researcher wrote an

explanatory letter (Grbich 1999) or bdquoparticipant‟s information sheet‟ (appendix

5) which included information on informed consent (Denscombe 2003)

After piloting the tools the researcher started by making calls to make

appointment for interviews As the quantitative data collection went on

recruitment of participants to take part in qualitative aspect was done

simultaneously due to time constraints The researcher used individual

judgement to asses those participants who would be courageous enough to

respond to the questionnaire online and to the interviews The managing

46

director for RCBusiness Support Ltd also provided a number of potential

respondents who were used at the initial stages of the study Each interview

session lasted averagely 50 minutes The researcher went to organise the

teleconferencing for the focus group on Skype which also lasted for average

50 minutes

37 Data Analysis

Since the distinction between quantitative and qualitative research is not

watertight (Denscombe 2003) data analysis embraced both because they

have similarities and differences (Neuman 2000) There was analysis of

words and numbers thus holistic versus specific focus (Denscombe 2003)

The analysis adopted a five stages approach (Denscombe 2007) The first

stage was data preparation followed by data exploration analysis

presentation and finally validation

Though some researchers champion for advanced inferential statistics

(Denscombe 2007) the researcher opted for descriptive statistics for the

quantitative data analysis because they still remain effective ways of data

analysis and presentation (ibid) The research data involved nominal as well

as discrete and continuous data which could effectively be analysed using the

chosen method The data was grouped frequencies were described and

finally any linkages were identified The end product of the analysis process

is presented in the results section in various formats Basic statistical

techniques were used to give the data additional credibility in terms of

interpretations of the findings (Denscombe 2007)

47

For the qualitative data the first thing was to back up the original voice

recorded focus group discussion into a password protected lap top This

ensured not only the security of the data but also a back up in case of data

loss The researcher then listened to the recording several times to familiarise

himself with the data after which transcription took place After that the data

was interpreted and categories themes were identified since thematic

analysis was employed The Putz (2000) model was used as a guide to

finding themes The findings are presented in the results section

38 Planned programme of dissemination

The study findings were disseminated to all relevant stakeholders in print

format including the university as part of the postgraduate degree requirement

in academically fulfilling format Two copies of the report were sent to the

Ministry of SMEs in Mauritius and two copies to the Board of Investment of

Mauritius in the UK as part of the requirements of ethical approval and

research permission granted by the ministry

Finally it was hoped that the report would meet publication requirements so

that it could get a wider audience through a reputable journal

48

39 Time scale

The study was anticipated to take the following breakdown from the time all

ethical approvals and consent were obtained

Table 1 Table showing the study time scale

Stage Time allocation Action item Accountable person

I Weeks 1 - 3 Research set up Sampling and

access to participant negotiations

Angelinah Boniface

II Weeks 4 - 12 Data collection and Analysis Angelinah Boniface

III Weeks 12 - 16 Analysis Report writing and

dissemination

Angelinah Boniface

310 Limitations and Delimitations

This study was not fully funded as such high telephone costs travelling

affected the exercise Only business people in Mauritius both men and women

were interviewed The study covered both local and foreign investors

Participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

49

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

A major limitation is a low response rate of the questionnaire and therefore a

representative sample of the SME population was not achieved Thus any

conclusions made from the analysis of the collected data cannot be

generalized to the broader SME population Bias may have been inadvertently

introduced during interviewing caused from such things as leading questions

50

CHAPTER 4

RESEARCH FINDINGS AND DISCUSSION This chapter aims to discus the research findings from the study The chapter

is divided into two sections the first part presents and discusses the

quantitative data and the second part discusses qualitative It is therefore

worth mentioning that the Putz (2000) model was used to guide the

qualitative data analysis and some of the themes were taken from the model

and some were generated from the research findings It must be noted that

any findings uncovered from this study cannot be generalized to the broad

public domain regarding SMEs

Section A of the questionnaire and the interview guide included questions that

collected background information on the SME managers and the responding

firms These data constitute the substantive material for analysis in the

ensuing sections The tables below depict the socio demographic

characteristics of the survey participants age group gender educational level

and experience as ownermanager In the following sections there aspects

are discussed

51

41 RESPONDENTS RATE ACCORDING TO SECTORS

TABLE 2

SECTOR SEHDAS SURVEY SENT

SURVEY RECEIVED

RESPONSE RATE

Leather and Garments

1678 20 12 60

Wood and Furniture

2196 20 11 55

Paper Products and Printing

1541 20 9 45

Chemical Rubber and Plastic

1376 20 11 55

Pottery and Ceramic

793 20

17 85

Jewellery and Related Items

1674 20 13 65

Fabricated Metal Products

1267 20 14 70

TOTAL 7 140 101 72

Table 2 shows the response rates from various sectors of SME in Mauritius

which were targeted by the online survey As the table indicates pottery and

ceramic sub sector had the highest response rate (85) with paper products

sector giving the least response rate (45) Overall 72 response rate from

all the targeted sectors was satisfactory It is worth mentioning that the total

number of participants adds to 140 since this question was only directed to

sectors not to other stakeholder in the research sample

52

42 DEMOGRAPHIC PROFILE PARTICIPANTS

TABLE 3 AGE GROUP AS PER PARTICPANT

AGE GROUP FREQUENCY PERCENTAGE

-25 7 43

26-35 34 211

36-45 53 329

46-55 35 217

56-65 22 137

gt 65 11 63

TOTAL 161 100

Evidence from most of entrepreneurial literature suggests that self-

employment becomes an increasingly attractive option as one nears middle

ages As can be seen in table 3 respondent‟s ages ranged from 25 to 65 and

the largest proportion (329) of the participants was in the age range of 36ndash

45 Additionally participants were biased towards the age ranges of between

36 and 65 and away from the under 25 and over 65

TABLE 4 GENDER PROFILE AS PER PARTICIPANT

GENDER

Male 116 720

Female 45 280

TOTAL 161 100

53

In relation to gender the research sample was predominantly male (72) a

striking although unsurprising demographic characteristic that reflects the

composition of the larger business sector in the country as a whole

Consequently only (28) were females This is clearly illustrated in table 4

above

TABLE 5 EDUCATION PROFILE AS PER PARTICIPANT

EDUCATIONAL LEVEL

Primary 8 50

Junior-level 29 180

O-level 78 484

Diploma 34 211

Higher Degrees 12 75

TOTAL 161 100

As evident from table 5 the educational levels attained by respondents varied

considerably as follows Primary School Certificate (8 or 5) Junior

Certificate (29 or 180) Ordinary Level (78 or 484) Diploma (34 or

211) and higher Degrees (12 or 75 ) On the whole though the data

suggest that the educational levels of our respondents are low the largest

proportion (398) possessing an Ordinary Level certificate

54

TABLE 6 YEARS EMPLOYED AS CEO AS PER PARTICIPANT

Years Of Employed as CEO

0-3 44 273

4-7 88 546

8-14 15 94

15-19 11 68

Over 20years 3 19

TOTAL 161 100

Not surprisingly table 6 shows that most of the responding executives did not

have education that emphasized a business curriculum This can be

understood with respect to the Mauritian educational curriculum which largely

overlooked business subjects until very recently

The research sample participants had been employed at their current firms on

average 1467 years and had an average of 12 years experience in the

manufacturing industry Four predominant job titles used by the senior

executives emerged from the questionnaireinterview responses Managing

Director (38) Director (26) Manager (20) and Chief Executive Officer

(16)

55

43 CHARACTERISTICS OF RESPONDING FIRMS

This section presents the descriptive statistics of the responding firms The

description focuses on age of the firm employment size firm revenues and

firm ownership

TABLE 7 COMPANY AGE PROFILE

Age of Company Frequency Percentage

1- 3 years 44 314

4- 6 years 68 486

7-10 years 19 136

11-15 years 7 50

Above 15 years 2 14

TOTAL 140 100

Table 7 displays the statistical data Of the firms responding the largest

proportion (486) was 4 to 6 years old Overall the sample reveals a skewed

distribution towards the ranges between 4 and 15 Also it is interesting to note

that 915 of the responding firms are mature that is beyond the start-up

phase

TABLE 8 EMPLOYEE PROFILE AS PER PARTICIPANT

Number of Employees

50-99 101 721

100-200 39 279

TOTAL 140 100

56

Unsurprisingly the vast majority of the responding businesses had fewer than

100 employees as depicted n table 8 with the largest proportion (701) in

the 50ndash99 employee categories The study found out that most small

companies would opt to have family and relatives as employees to minimise

costs Only 32 average of the firms were medium-size The preponderance

of small firms in the sample mirrors a more general pattern of firm distribution

in the country where medium and large firms are a conspicuous small

minority

TABLE 9 ANNUAL SALES AS PER COMPANY

Annual Sales

Less than R100 000 88 629

R101 000- R250 000 36 257

R251 000- R15 million 11 79

Above 15 million 5 35

Total 140 1000

As shown in table 9 the largest proportion of responding firms 88or 629

achieved a turnover below R10000000Only scant 11 or 79 posted annual

revenue in excess of R15 million

57

TABLE 10 OWNERSHIP AS PER PARTICIPANT

Ownership

Wholly Citizen 76 550

Joint Venture 42 293

Foreign Owned 22 157

TOTAL 140 100

Regarding ownership table 10 shows that an overwhelming majority or 550

of firms were wholly citizen-owned while the remaining 293and 157

were joint venture with citizen stake and foreign-owned respectively

44 Language

From most of the participants investors do not have to learn Local Mauritius

language since English and French are the official languages in the country

Since most of the investors to Mauritius are either English or French speaking

language as such is not a barrier to business practices and success for

prospective investors

ldquohellipwell it is not very important for foreign investors to learn languages

spoken in Mauritius because we can speak both English and Frenchrdquo

[Participant A5]

ldquohellipactually language is not barrier to English or French speaking investorsrdquo

[Participant A21]

58

Language is perhaps the most complex and perplexing aspect of the

Mauritian social mosaic (Rassool 1996) Contrary to the results that show that

language is not a problem for investors since most of the investors who come

to Mauritius are English or French speakers who normally fits well in the

society since these are the two official languages

This intricacy derives from the number of languages spoken combined with

the uses to which they are put and the socio-political connotations they bear

Baker and Stein (1977) scholars studying language use in Mauritius have

found that English is associated with knowledge French with culture

Creole with egalitarianism and other languages ancestral heritage

Consequently although Creole is the most widely spoken language in the

country French predominates in the media and English is the official

language of government and school instruction (Stein and Baker 1977)

According to the 1983 census the top five languages were Creole 541

Bhojpuri 204 Hindi 115 percen French 37 and Tamil 37 These

figures indicate the principal language used in the home Most Mauritians

however speak several languages

Literature suggests that global organizational structures need to adopt

common rules and procedures in order to have a common bdquolanguage‟ for

communicating across cultural borders (Kostova 1999 Kostova and Roth

2003 Gupta and Govindarajan 2000) This is directly reflected by the results

above that foreign investors need not to learn the local language of locals but

its important to create a common language within the organisation that is

59

understood by all stakeholders in the organisation for effective and efficient

communication

45 Religion

The study found that main religions in Mauritius are Hindu Muslim and

Christianity to a lesser extent Hindus make up approximately half of

religiously affiliated Mauritians Of the remaining Mauritians approximately a

third are Christians and about 15 Muslim followed by small Buddhist and

Sikh communities It is therefore imperative that a foreign investor considers

religion of the people of Mauritius before setting up a business Religion

The study also found out that various religions found on Mauritius tend to play

a major part in the islands cultural events and churches temples and

mosques are to be found everywhere Hindu and Tamil celebrations are part

of Mauritian cultural life

ldquohellipFestivals such as Divali (the festival of lights) Holi (in which participants

are covered in colourful powders) and Thai Poosam in which Tamil devotees

pierce their bodies with masses of needles as an act of penance are

popularly attended by Mauritianshelliprdquo [Participant A60]

ldquohelliphellipthere are also a number of diverse practices and superstitions

originating in beliefs brought from Africa and Asia Local sorcerers known as

longanistes or traiteurs are sometimes called in to settle arguments exact

revenge or administer love potionshelliphelliprdquo [Participant B41]

60

However all communities live together in harmony with each other regardless

of religion the study learnt

hellipHarmonious separatism is how we characterise our communal relations

in Mauritiushellip [Participant A13]

Since all citizens are ldquodescendants of slavery there are no tribes unlike

other African countries This has made integration and assimilation easier and

it makes it very easy for any SME to adapt to the local conditions due to pre

existing harmonyrdquohellip [Participant A13]

It is worth noting that businesses remain closed in public religious days but

the purchasing power remains the same regardless of whether it‟s a public

holiday or not

ldquohellipthe demand is not dependent on whether itrsquos a holiday or nothelliprdquo

[Participant A11]

ldquohellipit doesnrsquot matter really whether its holiday or religious holidayhelliprdquo

[Participant A21]

According to Stein and Baker (1977) the Mauritian society is noteworthy for

its high degree of religious tolerance Mauritians often share in the

observances of religious groups other than their own In part as a result of the

multiplicity of religions Mauritius has more than twenty national holidays In

addition the government grants subsidies to all major religious groups

61

according to their membership (Stein and Baker 1977)This is also evident

from the results of the research

Ethnicity religion and language have been important factors in shaping the

way Mauritians relate to each other in the political and social spheres Despite

the fact that sectarian factors are less of a determining factor in peoples

social and political behaviour they remain an important clue to the peoples

past and self-identity (Rassool 2001) As a foreign investor understanding

the religious belies of a society and taking all the necessary details in to

consideration play a major role in an international business environment

setting (Hosftede 1980) For example observing religious holiday and making

sure employees get days off and annual leaves on such important days

having prayer rooms for those willing to pray at work and creating a non-

discriminatory environment for all employees

It is worth mentioning that while religion does not have a direct impact on

Mauritius investment since it an international business hub However it is

important for investors to take note of all the aspects of religion since it plays a

very important role in lives of the Mauritians For example there are religious

holidays as an employer it is important to follow the religious holiday calendar

and give annual leaves to employees on such important days

46 Social Life

For the interest of prospective investors the study found that the social life in

Mauritius is very much close to families and friends People all meet at open

markets for normal shopping and socialise over weekends ldquoeven ministers

62

managing directors of big companies go to open marketsrdquo [Participant

A12]

There is no busy night life in the country as well as cinema and theatres

because most people prefer home video entertainment ldquoMost people found at

social places like cinemas pubs clubs etc are employees and not

employersrdquohelliphellip [Participant A12] Prospective investors should therefore

know that they are likely to meet business associates at board rooms or at

their offices rather than at social centres

In a society where tolerance is a national virtue and ethnic conflicts are

invisible to the casual visitor it takes time to learn the dos and donts of

socialising ldquohelliphere in Mauritius you must realize that we walk on eggs

continuouslyhelliprdquo [Participant B36] For a peaceful and tolerant as Mauritius

undoubtedly is the diverse groups populating the island do not collectively

make up a nation Mauritius like any other island is a nation of nations and

compromise is the order of the day be it in politics in the economy in the

media or at a dinner party the study found

The study found out that unlike other African societies Mauritius people would

prefer to stay at home and watch movies play video games with kids or visit

friends and relatives to socialise or for a night out There are not many social

night clubs in Mauritius as compared to the United Kingdom ldquohellipmany homes

today have a Digital Video Decoders (DVD) sets and donrsquot see the importance

of going out to cinemas and would helliphelliphelliprdquo [Participant A12]

63

This does not come as a surprise since literature suggests that Mauritius

though it is multicultural society and an international hub for business there

are a quiet peaceful and tolerant nation and would prefer to keep their space

(Stein and Baker 1977)

47 Market Accessibility

The study found that as first foreign investor Mauritius government has open

market programme When the free operational zone initiative began investors

imported raw materials imported duty free and foreign companies had to

show transformation of raw materials into fished exports since the

government‟s aim was to increase exports thus improve balance of trade

However in the early stages the initiative did not work as expected because

of certain barriers

Lack of adequate government incentives to lure more investors

Too much repetition meaning most of the companies where doing the

same thing

Lack of skilled human resources

The scenario is summarised by participant B3 in the following

statementldquohelliphellipour people did not have culture of businessrdquo

For more access to the markets further initiatives were put into place The

government assured investors of freedom of capital movement that is the

investors were guaranteed that they would bring their money into and out of

the country whenever they felt like doing so In addition the government

64

embarked on providing more facilities (industrial buildings) and infrastructures

all over the country opening up rural areas because towns already had

infrastructures Lastly first time investors were provided with free access to

customs thus maintaining the earlier option of tax free imports

While Mauritius was doing all these events elsewhere in the world played to

their favour European Union and USA were imposing import quotas on

Chinese and Indian imports to prevent damping So these investors had to

look for alternative markets and Mauritius turned out to be one of such

markets But the government had to act quickly to avoid bdquotransit investors‟

ldquohellipthey are investors who want to do business when it favours them but when

they begin to loose certain privileges or profits get diminished then they take

offrdquohelliphellip [Participant B3]

To avoid this foreign investors were made to transfer skills and knowledge to

local community which led to emergence of Mauritius community of

manufacturing

ldquowho started from easy stitching like socks pyjamas bras etc and later

upgraded to big Mauritius labelshelliprdquo [Participant B3]

The study further found that the initiative did not stop there The government

further established Mauritius Enterprise Development Investment Authority

(MEDIA) in 1985 which took lead in looking for prospective investors from

65

Europe USA Hong Kong and India among others Any willing investor was

transported to Mauritius and accommodated freely on government accounts to

tour the country and carry out investment feasibility studies This helped to

popularise the investment opportunities in Mauritius and attracted many more

investors Currently MEDIA has been transformed into Mauritius Board of

Investment which is no longer in charge of managing industries but

ldquopromotes Mauritius businesses abroad and participates in trade fairs to

further open uprdquo [participant B3]

The study also found out that there are specific niche markets for foreign

investment in Mauritius namely the Offshore Industry the Financial Industry

the Construction and Tourism especially in the area of high class luxury

property market in form of villas hotels and apartments and of recent the

Information Technology (IT) industry These industries cover a large spectrum

including SMEs

ldquohellipone of these sectors makes a very good investment for any investor

especially the construction industryhelliprdquo [Participant A89]

The results agree with Putz (2000) which notes that niche markets make

establishing a business by immigrants easier because the immigrants needs

for consumer goods create a specific demand This is evidence by all the

incentive the Mauritian government have put in order to attract foreign

investors in to country for the benefit of the Mauritian population Furthermore

Putz (2000) emphasise the opportunities offered by the host country including

66

access to the market and job market conditions as important factors for

international business

48 The role of ICT to SME business in Mauritius

The study found that Mauritius has a very well established ICT sector It has

formed the backbone of SME success in Mauritius As early as 1990 the

country provided hellip ldquothe fastest broadband in the world to help SME business

investors who were each allocated free 2MB internet accessrdquohellip[Participant

A 23] Recently the government has in turn invested a lot of money in

developing a cyber city a few kilometres away from the capital Port Louis

which will form the hub for future investments

This high level of ICT development in the country has created SME in areas

such as offshore financial services calls centres and enhanced tourism

industry growth Any prospective investors are guaranteed of highly

developed ICT backed up by highly qualified local human resources The

offshore investment sector has even been further boosted byhellipldquobilateral

agreements with India allowing companies registered in Mauritius to transfer

funds to India tax freerdquohellip[participant B13]

It is hoped that in helliprdquo5 years time the whole island will have free wifi

connectivityrdquo participant B33 The country not only makes use of its advanced

ICT sector but has become a big player in the region as well For example

Mauritius state informatics computerised South African government in 1996 It

has also won other computerisation contracts in Zambia Zimbabwe Namibia

Kenya and Ghana To sustain such success ldquopartnerships have been formed

67

with global players such as Microsoft to provide training not just to Mauritius

nationals but other scholars from the South Eastern Africa region as

wellrdquohellip[participant B13]As matter of fact the government of Mauritius has

invested billions in building s cyber-city a few miles aware from the capital

Port Louis

ldquoits opening in July this year and it is expected to be the centre of attraction

for investorsrdquo [Participant B13]

ldquoactually the government invested in this cyber-city with the intention to

attract European and American investorsrdquo [Participant A6]

From these results there is evidence that technology plays a major role in

SME development Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

68

48 Governance and the role of women in SME sector

in Mauritius

Mauritius is a multicultural country with ldquo70 of the population of Chinese

Indian ancestry 2 white French origin and the remaining mixed race ndash

creolesrdquo [participant A17] Europe has not have a lot if cultural influence on the

country and predominant cultures are Asian African cultures Study found

that common folklore popular songs in Mauritius would also be ordinary

found on other African countries such as Senegal Mozambique Cameroon

and Sierra Leone among others signifying deep rooted African traditions

The government maintains ndash discrimination laws for either gender In the early

stages of SME development women provided the bulk of the labour in the

rural areas as industries moved away from cities into the rural areas There

are concerted efforts to get women into jobs especially leadership roles

ldquowomen themselves are too slow to act and take advantage of the

government incentivesrdquo

The study found out that woman in Mauritius do not occupy positions of

strategic power decision making This is not a surprise because it is the same

with most Southern African countries The government of Mauritius has put a

lot of structures to support women in business but women are taking it slow to

utilize these structures

69

There are many government agencies and organizations headed by women

and even cabinet posts but most women would rather stay out of politics

becausehelliphellipldquopolitics can get very dirty involving personal lives of politicians

which men donrsquot mind but women do mind a lot aboutrdquohellip[participant A 17)

However in other sectors like education and healthcare there are many

women represented in the labour force

The study also found out that just like any other society one can not ldquohellipstop

some kind of abuse for both males and females There are cases of both

female and male harassment but the law comes in to protect such victims

There are also cases of petty crime and rape involving women either as

perpetrators or victimsrdquohellip [Participant A13]

According to AllAfrica Global Media (2008) the winds of change are blowing

across the island of Mauritius and many men in this traditionally conservative

nation are working hand in hand with women to see that the common sense of

gender equality prevails The absence of women at the decision-making table

usually means the absence of their priorities and needs Irrespective of the

Southern African Develoment Community (SADC) Declaration there are so

few women in politics This is evident from the results of the study which found

that women will rather do health jobs and education than to play the dirty

tricks of politics

Women councillors make up a mere 37 in the Moka-Flacq District Council

This is the lowest figure not only in Mauritius but also in the SADC region

70

This is far from the 2005 30 target not to mention the 50 goal now being

set for the region and included the draft Protocol on Gender and Development

up for review at the August SADC Heads of State Summit ( AllAfrica Global

Media 2008)The results found out that there is also a few representations of

women in business Women do mostly the dirty jobs of caring for children and

their families and do not have the courage to enter the business sector This is

not surprising especially in the SADC region women play the minority role

and are rarely represented at the strategic decision making level hence their

needs are always neglected resulting in women poverty

49 Challenges faced by the country and hence SME investors

Stiff competition from other countries such ashelliphellipldquoBotswana Vietnam and

South East Asia in the textile industry due to cheap labour Maldives and the

Caribbean Islands for tourism difficult in Training enough qualified personnel

in ICT to cope with demand International competition and access to fundsrdquo

hellip[participant B13]

To face these challenges the study found that the country has expanded

tertiary education and formed partnerships with foreign universities such as

ldquoFrench Scientific University which has been running Medical school in

Mauritius for 10 years By the time of this study an agreement had been

reached by Thames valley university (UK) to open up campus in

Mauritiusrdquohellip[participant B15] The aim of the government is to offer high

quality education to students from the region as well as far away like China at

affordable cost and to compete with European universities Further to

71

educational development the study also found out that the country is striving

to create partnerships with ldquoresearch organisations and to create high quality

healthcare so as to benefit from health tourism where would just travel to the

country to get affordable high quality specialised health carerdquohelliphellip [Participant

A3]

Finally results show that there is stiff competition from different sectors of

business and other force which needs to be taken into consideration when

doing business internationally Globalization tends to redistribute economic

rewards in a non-uniform manner a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) It essential to know all

the factors surrounding the business sector and understanding all the

business practices before investing to avoid any loss

72

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

Research on culture and IB is definitely a bdquogrowth‟ area because the business

world is in many ways becoming one The researcher concluded the following

based on study findings

Firstly the cultural diversity and harmony of the island make Mauritius a

unique place in the world It is also known for its social peace political stability

and racial harmony Its steady economic growth over the years coupled with

its nation‟s social cohesion and prosperity ensure continuing development

Secondly Mauritius enjoys a literacy rate over 80 percent Skilled labour

graduates and qualified professional including lawyers engineers IT

programmers consultants accountants and chartered secretaries are

available to suit virtually all business needs in two international languages

English and French Language is therefore not a barrier to foreign investment

In addition academic training at the University of Mauritius and the newly

established University of Technology a comprehensive system of vocational

training through the Industrial and Vocational Training Board (IVTB) ensures a

ready supply of skills in a number of fields such as tourism engineering

electronics jewellery ICT printing and textiles

Thirdly In view of the importance of foreign investment as a source of

sustenance to economic growth the government of Mauritius has taken a

series of policy measures to encourage its flows into manufacturing offshore

73

banking and financial services information technology communication and

tourism As far as foreign investors are concerned Mauritius offers itself as an

attractive destination because several positive features such as political

stability availability of skilled labour and investment-friendly rules and

institutions

Fourthly after a sustained growth path over the last three decades based on

sugar textiles and tourism Mauritius is now shifting gears to move towards a

higher stage of economic development so as to consolidate its position as a

premier international hub Foreign Direct Investment (FDI) has played an

important role in the development of Mauritius and will again be decisive when

the country embarks on high value-added capital intensive and knowledge-

based activities

Fifthly the government plays the role of a facilitator and has endeavoured at

all times to create the most conducive investment environment by enacting

appropriate legislations building state-of-the-art infrastructure investing in

human capital and introducing packages of investment incentives for the

manufacturing financial services and ICT sectors so as to enhance the image

of Mauritius

In this respect the Board of Investment (BOI) is the first contact point for

anyone investing in Mauritius Operating under the aegis of the Ministry of

Finance the BOI was established in March 2001 under the Investment

74

Promotion Act to give a new impetus to foreign direct investment The BOI is

the apex organization for the promotion and facilitation of investment in

Mauritius The primary role of BOI is to stimulate the development expansion

and growth of the economy by promoting Mauritius as a competing business

and service centre It aims at streamlining the legal framework and to make

better provision for the promotion and facilitation of investments in Mauritius It

acts as a facilitator and provides a one-stop shop service to both local and

foreign investors ensuring reliable and speedy processing of applications The

BOI receives processes and approves all applications for investing in

Mauritius It also assists investors in obtaining the necessary secondary

permits and clearances from relevant authorities thus ensuring a speedy

implementation project

Six Mauritius pursues a liberal investment policy and actively encourages

foreign direct investment in all sectors of the economy Attractive packages of

both fiscal and non-fiscal incentives tailor-made to the needs of each priority

area of development are offered to investors Excellent opportunities for

investment in Mauritius exist in various sectors of the economy including

manufacturing information technology knowledge industry regional

headquarters tourism and leisure financial services Freeport activities

amongst other sectors Some of the priority areas are in Information and

Communication Technology which is set to a play a lead role in the economic

development of the country in the medium and long terms The availability of

high bandwidth connectivity (with SAFE Project and international Gateways)

at near global parity in quality and tariff on the one hand and the setting up of

75

dedicated IT habitats including the Cyber city at Ebeacutene on the other hand

plus total Government support to this industry are testimony of the importance

of this industry to Mauritius Others include the manufacturing sector textiles

and apparel the spinning sector electronics and light engineering medicals

and pharmaceuticals agro-business leather products and jewellery and

watches

The export-oriented manufacturing sector has been the backbone of the

Mauritian economy for the past three decades This sector remains a major

constituent of the Mauritian economy in terms of foreign exchange earnings

employment and contribution to GDP and is called upon to continue to play

an important role in the consolidation and diversification of the industrial base

of the country certain

Lastly some incentives provided by government to foreign investors In the

manufacturing sector these include among others

No customs or duty or sales tax on raw materials and equipment

No tax on dividends

No capital gains tax

Free repatriation of profits dividends and capital

50 relief on personal income tax for expatriate staff

New incentives for the ICT Sector consist inter alia of

the availability of tax holiday up to year 2008 for specified

pioneering high-skills ICT operators typically geared towards the

export market such as software development multi-media and to

high-level ICT training institutions

76

customs duty-free import of ICT and similar equipment

50 relief of personal income tax for a specified number of foreign IT

staff

duty-free import of personal belongings of foreign IT staff

effective fast track procedure for procession of visa and work

permits for foreign staff including spouses

From the above the research concludes that Mauritius being a multicultural

society as it is the culture they share does not have a direct impact on

investment in Mauritius because of it is an international hub for business It is

also expected that from the results the situation is not going to change after

time but will keep in this shape for a long since it is the government incentive

to attract more investors into the country However there are certain aspect of

culture eg believes that foreign investors need to understand and take into

consideration This study recommends any prospective investor to make good

investment in to Mauritius without fear

77

CHAPTER SIX

REFLECTIONS FROM THE STUDY

The views derived from this study might not be directly applicable to the whole

region because of variations in socioeconomic settings in various parts of the

Mauritius Also views expressed in this study were obtained mainly from

urban based managers and respondents and might not be similar to rural

based SMEs from the same community or area

Some scholars might not support the sampling techniques used but they

were the most practicable given the circumstances

Legal practitioners in Mauritius were supposed to be part of the sample but

they were hard to reach with some declining to participate

Demographically and geographically the sites were larger than anticipated

given the time and resources available for the study

Lastly the study was limited to the previous 20 years which might have

yielded same generational trend missing the opportunity to get data across

various generations within the sites

78

CHAPTER SEVEN

FUTURE RESEARCH

With more funding and resources a similar study could be conducted

throughout a wider geographic region and encompassing all categories of

SMEs micro small and medium Furthermore with more time a greater

number of interviews could be conducted which would provide richer data that

would be more in depth for conclusive analyses to be made Additionally

participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

79

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

WORD COUNT 16 969

80

APPENDICES APPENDIX 1 MauritiusData Profile

2000 2005 2006

World view

Population total (millions) 119 124 125

Population growth (annual ) 10 08 08

Surface area (sq km) (thousands) 20 20 20

Poverty headcount ratio at national poverty line ( of population)

GNI Atlas method (current US$) (billions) 444 653 681

GNI per capita Atlas method (current US$) 3740 5250 5430

GNI PPP (current international $) (billions) 891 1239 1334

GNI per capita PPP (current international $) 7510 9970 10640

People

Income share held by lowest 20

Life expectancy at birth total (years) 72 73 73

Fertility rate total (births per woman) 20 20 20

Adolescent fertility rate (births per 1000 women ages 15-19) 39 40 41

Contraceptive prevalence ( of women ages 15-49)

Births attended by skilled health staff ( of total) 100 99

Mortality rate under-5 (per 1000) 18 15 14

Malnutrition prevalence weight for age ( of children under 5)

Immunization measles ( of children ages 12-23 months) 84 98 99

Primary completion rate total ( of relevant age group) 105 97 92

Ratio of girls to boys in primary and secondary education () 98 100 103

Prevalence of HIV total ( of population ages 15-49) 06

Environment

Forest area (sq km) (thousands) 04 04

Agricultural land ( of land area) 557 557

Annual freshwater withdrawals total ( of internal resources)

Improved water source ( of population with access) 100

Improved sanitation facilities urban ( of urban population with access) 95

Energy use (kg of oil equivalent per capita)

CO2 emissions (metric tons per capita) 23

Electric power consumption (kWh per capita)

Economy

GDP (current US$) (billions) 447 629 635

GDP growth (annual ) 40 46 35

Inflation GDP deflator (annual ) 37 48 41

Agriculture value added ( of GDP) 6 6 6

Industry value added ( of GDP) 31 28 27

Services etc value added ( of GDP) 63 66 68

Exports of goods and services ( of GDP) 63 57 60

Imports of goods and services ( of GDP) 65 61 67

Gross capital formation ( of GDP) 26 23 25

Revenue excluding grants ( of GDP) 220 214 215

Cash surplusdeficit ( of GDP) -11 -21 -30

States and markets

Time required to start a business (days) 46 46

Market capitalization of listed companies ( of GDP) 298 416 567

Military expenditure ( of GDP) 02 02

Fixed line and mobile phone subscribers (per 100 people) 39 82 90

Internet users (per 100 people) 73 241 145

Roads paved ( of total roads) 97

High-technology exports ( of manufactured exports) 1 2 24

Global links

Merchandise trade ( of GDP) 82 84 91

Net barter terms of trade (2000 = 100) 100 109 115

External debt total (DOD current US$) (millions) 1713 2153 1997

Short-term debt outstanding (DOD current US$) (millions) 767 1363 1363

Total debt service ( of exports of goods services and income) 181 72 71

Foreign direct investment net inflows (BoP current US$) (millions) 266 39 107

Workers remittances and compensation of employees received (US$) (millions)

177 215 215

Official development assistance and official aid (current US$) (millions) 20 34 19

Source World Development Indicators database April 2008

81

APPENDIX 2

SUMMARY GENDER PROFILE (Mauritius)

Mauritius

Sub-Saharan Africa

Upper middle income

1980 1990 2000 2004 1980 2004 1980 2004

GNP per capita (US$) 1210 2300 3690 4640 652 601 2391 4769

Population

Total (millions) 10 11 12 12 3850 7258 4394 5762

Female ( of total) 507 501 502 503 503 501 515 514

Life expectancy at birth (years)

Male 63 66 68 69 47 46 63 66

Female 69 73 75 76 50 47 71 73

Adult literacy rate ( of people aged 15+)

Male 848 884 954

Female 750 805 942

LABOR FORCE PARTICIPATION

Total labor force (millions) 0 0 1 1 157 299 193 256

Labor force female ( of total labor force)

37 34 34 35 43 42 42 41

Unemployment

Total ( of total labor force)

33 88 102 12

Female ( of female labor force)

36 96 126 134

EDUCATION ACCESS AND ATTAINMENT

Net primary school enrollment rate

Male 91 96 94 68

Female 92 97 96 60

Progression to grade 5 ( of cohort)

Male 97 99

Female 98 99

Primary completion rates ( of relevant age group)

Male 61 105 98 66 95

Female 63 104 102 56 96

Youth literacy Rate ( of people aged 15-24)

Male 912 937 978

Female 911 954 974

HEALTH

Total fertility rate (births per woman)

27 23 20 20 67 53 31 20

Contraceptive prevalence ( of women aged 15-49)

75 26 76 22 69

95

82

APPENDIX 3

DATA COLLECTION FORM FOR THE SURVEY Sitehelliphelliphelliphelliphellip Participant numberhelliphelliphelliphellip MANAGING DIRECTOR CEO MANAGER

Age group -25 26 ndash 35 36 - 45 46-55 56-64 65+

Education Nursery ndash Standard 4

Std 5 ndash 7 (8) Form 1 ndash 2

Form 3 ndash 4 or A level

College University

Employment Yes No Business (what type)

Partnership Whole Citizen

Joint Venture

Age of Company

1-3 years 4-6 years 7-10 years

11-15 Above 15yrs

Number of Employees

10-25 50-99 100-149 150-200

Place of birth

In the constituency

Outside the constituency

Where

Residence Rural Urban Where

Before starting business

After business

Children

Boys Number

Girls Number

Any born a Yes None

Are they in school

Yes No Some

Working Yes No Some

Annual Sales

Balance Sheet

Less than R1000000

R101 000- 250 000

R251 000- 15 million

R 15 million +

Years Employed as CEO

0-3 4-7 8-14 15-19 Over 20 years

83

APPENDIX 4 Qualitative data questionnaire The following questions were used as a guide during the focus group discussions However they were not followed in the strict order or wording as they appear here

SOCIAL INCLUSION EXCLUSION

I am going to ask you questions regarding support you think the society could give foreign investors There is no right or wrong answers it is just about your opinion

a) How do you feel about foreign investors coming to Mauritius

b) How has your friendship with foreign business before and after they arrive in Mauritius

c) Do you keep in touch with foreign businesses around you and prospective investors

d) In your opinion how does foreign business feel about Mauritius

e) Are foreign businesses doing well or badly

f) What support structures or government incentives are there for foreign investors

g) What kind of support would you like to receive from the government

BUSINESS ATTITUDE AND BELIEFS

I am now going to ask you some general questions about business and your opinions about it

a) How would you describe the general business environment

b) Do you find it difficult to do business with people from different countries of the world Why

c) What do you believe the first thing to do on the morning before opening

your business (Local people) Why

d) How best can the Mauritius people be motivated into business How do you get over them

84

e) What areas do local people consider as niche areas for foreign

business

f) How do local people organize their business Why

g) As a local business person what would you consider as abomination of business in Mauritius Why

h) What is the role of women in the business sector

CULTURE

I am now going to ask you questions about the your culture

a) What are your views about business culture in Port Louis

b) What are the challenges of national culture on business practices in your opinion

c) What are the benefits of culture on business practice

d) Do you think foreign investors need to know the local language when investing in Mauritius

e) If you were to advice a foreign investor what would you want them to know about Mauritius

f) How do you think the family daily practice influences business in

Mauritius

g) What business actions of behaviors are sensitive to the local people

h) How best can foreign investors assimilate with the local business people

i) What do local people like to buy on weekends week days public religious holidays

j) What marketing strategies violet the culture of Mauritius ndashwomen naked Eating behavior Etc

85

APPENDIX 5

Introductory letter consent form

TITLE CULTURE AND INTERNATIONAL BUSINESS

ENTREPRENUERSHIP A CASE STUDY OF MAURITIUS

INTRODUCTION

I am Angelinah Boniface a student pursuing Masters of Science in

Information Systems the University of Sheffield United Kingdom I am

conducting a study on the Impact of culture on small and medium

enterprises for my dissertation The study is expected to last 3 months and a

report of the findings will be availed to all interested stakeholders including the

university as part of course requirements

PURPOSE OF THE STUDY

This study is intended to gain insight into views and opinions about

widowhood and inheritance in relation to health and well being of participants

and the community at large Evidence from this study may be useful in future

government and development agencies‟ planning and provision of relevant

interventions for the benefit of the whole community

VOLUNTARINESS AND CONFIDENTIALITY

Your participation in this study is purely voluntary and you can withdraw

at any time should you feel uncomfortable to proceed Information obtained

from this study will be used for no any other purpose other than the

dissertation It will be kept confidential only accessible to the researcher and

pseudonyms will be used to ensure anonymity and confidentiality of

participants and location The researcher will strive to treat all participants

with dignity respect equality and minimise possible harm that might arise

from the study

Agreeing to take part in this study will be treated as your consent to be

involved in this research BUT YOU HAVE THE RIGHT TO WITHDRAW

THE CONSENT

86

RISKS AND BENEFITS

There are no risks to the questions that will be asked If at any point you feel

uncomfortable to answer any question please feel free to ignore such to avoid

any harm

There is likely to be no immediate benefits to you as a participant However

the information obtained in this study will go a long way in informing the

younger generation and wider audience about the culture It might also be

used by the government and other development agencies to plan for

interventions relevant to the needs of widows in your community in the future

based on the evidence you have provided in this study

CONTACTS

The researcher can be contacted at +44 0791263163 lip07acbshefacuk

or linabonyahoocom in case of any questions issues

In case of any problems that need university attention my supervisor can be

contacted at kalbrightshefacuk

PLEASE DONrsquoT TAKE PART IN THIS STUDY IF YOU ARE BELOW 18

YEARS OF AGE

Thank you very much for your anticipated cooperation

Researcher‟s signature Participant‟s signature

helliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

87

REFERENCES

Bhagat RSet al (2002) Cultural variations in the cross-border transfer of

organizational knowledge an integrative framework Academy of

Management Review 27(2) 204ndash221

Boyacigiller NA amp Adler NJ (1991) ldquoThe parochial dinosaur organizational

science in a global contextrdquo Academy of Management Review 16(2) 262ndash

290

Bowling A (ed) (2002) Research methods in health Investigating health and

health services Buckingham Open University press

Dabee R and Greenway D (2001)The Mauritian Economy A Reader

PalgraveNew York

Dawson C D (2002) Practical research methods A user friendly guide to

mastering research techniques and projects Oxford How to Books Ltd

Denscombe M (ed) (2007) The good research guide for small scale social

research projects Berkshire Open University Press

Denscombe M(ed) (2003) The good research guide For small scale social

research projects Maidenhead Open University Press

Economic And Social Research Council (2005) ESRC research ethics

framework [online]

httpwwwesrcsocietytodayacukESRCInfoCentreopportunitiesresearch5

Fethics5Fframework [ Accessed May 05 2008]

88

Gilbert N (ed) (2001) Researching social life London Sage Publishers

Grbich C (1999) Qualitative research in health An introduction London

Sage publications

Hunter D amp Lang T (1993) The Leeds declaration Leeds Nuffield Institute

for Health

Neuman L W(ed) (2000) Social research methods qualitative and

quantitative approaches Needham Heights MA Allyn amp Bacon

Maynard M amp Purvis J (1994) Researching womens lives from a feminist

perspective London Taylor and Francis group

Muuka GN (2002) Africas informal sector matters a challenge to scholars

to close the knowledge gap Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

Business and Development International Conference Port Elizabeth April 3-

6 pp1-6

Southwood R (2004)The impact of ICT on SMEs ndash a motor for future

economic growth in hard-pressed times [Online] Balancing Act news update

wwwbalancingact-africacomnewscurrent1html [Accessed 26 January

2008]

Machacha L (2002) Impact of information technology on small and medium

enterprises (SMEs) in Botswana Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

89

Business and Development International Conference Port Elizabeth April 3-

6 pp277-82

Organisation for Economic Co-operation and Development (OECD)

(2000)OECD study highlights role of small and medium enterprises in job

creation Organisation for Economic Co-operation and Development

[Online]wwwoecdorgmediapublishpb00-11ahtm [Accessed 8 July 2008]

Commonwealth Secretariat UK (2006) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius London Commonwealth

Secretariat

Reed DM (1998) Using the Business Excellence Model in Small Service

Business British Quality Foundation

Taylor AW amp Adair RG (1994) ldquoEvolution of Quality awards and self

assessment practices in Europe a case for considering organisation sizerdquo

Total quality Management 5 (4) 227-237

United Nations (1993) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

Johanson J amp Wiedersheim-Paul F (1995) The Internationalization of the

Firm - Four Swedish Cases Journal of Management Studies 20 (3) 123-139

90

Chui ACW Lloyd AE and Kwok CCY (2002) The determination of

capital structure is national culture a missing piece to the puzzlerdquo Journal of

International Business Studies 33(1) 99ndash127

Earley PC amp Gibson CB (2002) Multinational Teams A New Perspective

Lawrence Earlbaum and Associates Mahwah NJ

Gibson CB (1999) ldquoDo they do what they believe they can Group-efficacy

beliefs and group performance across tasks and culturesrdquo Academy of

Management Journal 42(2) 138ndash152

Hofstede G (1980) Cultures Consequences International Differences in

Work-Related Values Sage Newbury Park CA

SMIDO (2006)A new Vision For SMEs Development Mauritius

Government Printer Port Louis

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Stone A (1997) SMEs and Technology why should we make special efforts

to help World Bank

Bhagat RS et al (2003) Knowledge in Cross-Cultural Management in Era

of Globalization Where Do we Go from Here in D Tjosvold and K Leung

91

(eds) Cross-Cultural Management Foundations and Future Ashgate Englan

155ndash176

Cairncross F (2001) The Death of Distance Harvard Business School Press

Boston MA

Commonwealth Secretariat UK (2005) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius Commonwealth Secretariat

Drucker PF (1995) Managing in a Time of Great Change Truman Talley

BooksDutton New York

Guilleacuten M (2001) ldquoIs globalization civilizing destructive or feeble A critique

of five key debates in the social science literaturerdquo Annual Review of

Sociology 27 235ndash260

Gibson CB and Cohen SG (2003) Virtual Teams that Work Creating

Conditions for Virtual Team Effectiveness Jossey-Bass San Francisco

Grazol P et al(2004) ldquoThe Effect of Culture on IT Diffusion Email and Fax in

Japan and the US Information Systems Researchrdquo Journal of International

Consumer Marketing 16 4 pp 29-64

Greider W (1997) One World Ready or Not Crown Business New York

92

Gertler MS (1997) The Invention of Regional Culture In Lee R and Willis J

eds Geographies of Economies London Arnold

Govindarajan V and Gupta AK (2001) The Quest for Global Dominance

Transforming Global Presence into Global Competitive Advantage Jossey-

Bass San Francisco

Haire M et al(1966)Managerial Thinking An International Study Wiley

New York

Heuer M et al(1999) Cultural stability or change among managers in

Indonesia Journal of International Business Studies 30(3) 599ndash610

Hofstede G (1997) Cultures and Organizations Software of the Mind New

York McGraw-Hill

Hofstede GH (2001) Cultures Consequences Comparing Values

Behaviors Institutions and Organizations Across Nations London Sage

Publications

Hoecklin L (1995)Embedded Autonomy States and Industrial

Transformation Princeton NJ Princeton University Press

93

IBP USA (2002) Mauritius Investment and Business Guide IB Tauris and Co

LTD London

Kerr C et al (1960) Industrialism and Industrial Man Harvard University

Press Cambridge MA

Kirkman BL amp Shapiro DL (2000) ldquoUnderstanding why team members

won‟t share an examination of factors related to employee receptivity to team-

based rewardsrdquo Small Group Research 31(2) 175ndash209

Lisenda L (2003) Small and medium-scale enterprises in Botswana their

characteristics sources of finance and problems BIDPA Gaborone

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Meredith GG (ed) (2004) Small Business Management in Australia

McGraw-Hill Sydney

Mistry PS (1999) ldquoCommentary Mauritius ndash quo vadisrdquo African Affairs 98

(393) 551ndash69

Mullins LJ(ed) (1999) Management and Organizational Behavior 5th ed

London Financial Times Pitman

94

Myers MDamp Tan FB (2002) ldquoBeyond Models of National Culture in

Information Systems Researchrdquo Journal of Global Information Management

10 (1) 112-134

Putz R (2000) ldquoCulture and entrepreneurship views from the middle and

lower level managersrdquo Journal of Business Ethics 22 145- 153

Scottish Economic Statistics Scottish ExecutiveONS IDBR (2005)Size

Analysis of Welsh Business SDR 692004Statistical Press Release URN

0440

Straub D et al (2002) rdquoTowards A Theory-Based Measurement of Culture

Journal of Global Information managementrdquo 10 (1)

Schaeffer RK (2003) Understanding Globalization The Social

Consequences of Political Economic and Environmental Change Rowman amp

Littlefield Lanham MD

SMIDOA new Vision For SMEs Development(May 1996)

SMME Task Force Report (1998) Small medium and micro-enterprises task

fore force report Government Printer Ministry of Commerce and Industry

Sondergaard M amp Hofstede G (1994) ldquoA study of Reviews Citations and

Replicationsrdquo Organization Studies 15 (3) 447-456

95

Schein EH (1992) Organizational Culture and Leadership Jossey-Bass

San Francisco

Stone A ( 1997) SMEs and Technology why should we make special efforts

to help (World Bank 1997)

Statistical Press Release (2005) URN 0592 Office for National Statistics

Weisinger JYamp Trauth EM (2002) ldquoSituating Culture in the Global

Information Sectorrdquo Information Technology amp People 15 (4) 306-320

United Nations (2005) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

x

randomly selected and respondents would suggest further participants Data

was put in to categories and themes and analysed according to those themes

Putz (2000) model was used as guide to selection of themes

Findings revealed the following 1 Language and religion are not a barrier to

foreign investment in Mauritius 2 Mauritius is a peaceful and tolerant nation

and most of its social life revolves around family and friends 3 Market

opportunities exits in the manufacturing industry offshore financial services

cyber culture and the construction industry 4 The country‟s business

economy faces stiff competition from Botswana South Africa and Vietnam 5

The government plays an important role in ensuring security for foreign

investors

From the results it was concluded that culture plays an important role in the

daily lives of the Mauritian people but it does not have a direct impact to

investment in Mauritius

1

CHAPTER ONE

INTRODUCTION

Globally Small and Medium Enterprises (SMEs) are increasingly regarded as

vital for diversifying economies through the creation of employment

(Machacha 2002 p 277) The OECD (2000) notes that small and medium-

sized enterprises account for 60-70 percent of jobs created in member

countries Southwood (2004) in discussing the status of the SME sector in

Africa observed that governments and large corporations dominated

economies of the countries yet the real engine of economic growth lay with

SMEs Muuka (2002 p 1) in discussing the SME sector in Africa noted that

the informal sector is huge due to the large numbers of employees it absorbed

as a consequence of inadequate jobs and opportunities in the formal sector

The author points out that in many African countries the informal sector is

estimated to employ from three to six times the number of employees in the

formal sector However very little has been documented through research

about this important sector

In Mauritius the Mauritian government believes that the real engine of

sustainable and equitable growth is in the SME sectors Not only is it of great

importance for the rate of job creation and income generation but also it

deserves particular attention since the sector has been largely neglected in

the past In this respect this study of Mauritius is important in addressing

some of issues of culture by using the International business as a framework

for this study to understand the business environment in Mauritius and the

potential for growth in a global perspective (Stone 1997)

2

In this new millennium few executives can afford to turn a blind eye to global

business opportunities Japanese auto-executives monitor carefully what their

European and Korean competitors are up to in getting a bigger slice of the

Chinese auto-market Executives of Hollywood movie studios need to weigh

the appeal of an expensive movie in Europe and Asia as much as in the US

before a firm commitment The globalizing wind has broadened the mindsets

of executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories

However research shows that as markets competition and organisations

globalise the business people businesses themselves and consumers

involved in these institutions increasingly have to interact manage negotiate

and compromise with people from different cultures (Hofstede 1997

Hoecklin 1995) Global business managers report that when doing business

overseas challenges mount For example structural conditions physical

social and economic arrangements can affect business operations and

outcomes as can the varied norms and behaviours that come with different

national cultures

One such new trajectory is the concern with national culture Whereas

traditional IB research has been concerned with economiclegal issues and

organizational forms and structures the importance of national culture

broadly defined as values beliefs norms and behavioral patterns of a

national group (Hofstede1980) has become increasingly important in the last

two decades largely as a result of the classic work of Hofstede (1980)

3

National culture has been shown to impact on major business activities from

capital structure (Chui et al 2002) to group performance (Gibson 1999) For

reviews see Boyacigiller and Adler (1991) and Earley and Gibson (2002)

Weisinger and Trauth (2003) report that culture evolves and takes unique

forms in local offices of organizations This means that culture is both dynamic

and situated in its local context Thus external conditions both structural and

cultural can influence global business Yet small and medium enterprise

(SMEs) managers can have an impact on how their organizations‟ cultures

evolve Therefore strategic leaders need to introduce unique norms values

and processes that fit together coherently in successful organizations

Therefore the main purpose of this case study is to explore and understand

the Small Medium Enterprise (SMEs) business environment in Mauritius and

how SMEs can penetrate the business culture there

The purpose of this paper is therefore to explore and understand how national

culture influences international business decisions and how to culture affects

international business investment using Mauritius as a case study

In this chapter the author outlines the background of the study specifies the

study objectives describes the significance of the study gives methodological

overview and finishes off by outlining definitions of key terminologies

4

11 Background to the Study

Strategically located in the Indian Ocean at the crossroads of Africa and Asia

Mauritius is reputed for its beautiful countryside and its 150 kilometres of white

sandy beaches and transparent lagoon A British colony that gained

independence in 1968 officially known as Republic of Mauritius the country is

positioned to the east of the Madagascar Islands The geographical

coordinates of the nation are 20ordm17 South latitude and 57ordm33 East longitude

The total area covered by the island nation is 2040 square kilometres

Mauritius enjoys a maritime sub-tropical climate and is therefore an all-year-

round holiday destination From a monocrop economy depending mainly on

sugar it has diversified its economic activities into textile and apparel

industry tourism and financial service Mauritius has witnessed a massive

development in the last decades (SMIDO 2006)

5

Figure 1 Map of Mauritius showing all Provinces

Source Encarta World atlas online

6

Figure 2 Mauritius map showing political divisions of the country

Source Maps of the world online

The research area was around the capital city Port Louis marked in red For

anonymity the site was just called A or B Administratively Mauritius is divided

into nine Provinces (figure 2)

The country is remarkable in its ethnic diversity It forms a unique mosaic of

immigrants from the Indian sub-continent Africa Europe and China The

cultural diversity and harmony of the island make Mauritius a unique place in

the world The various religions found on Mauritius tend to play a major part in

7

the islands cultural events and churches temples and mosques are to be

found everywhere Hindus make up approximately half of religiously affiliated

Mauritians followed by Muslims and Christianity as the minority It is also

known for its social peace political stability and racial harmony Its steady

economic growth over the years coupled with its nation‟s social cohesion and

prosperity ensure continuing development (Country Profile 2005)

The country is equipped with a highly skilled labour force to suit virtually all

business in two international languages English and French and a very good

infrastructure thereby attracting Foreign Direct Investment The average

economic growth was 56 over the last 3 years The income per Capita has

reached 4000 US Dollars As a result the standard of living has gone up The

country has now a life expectancy rate of 714yrs an adult literacy rate of 83

(Country Profile 2005)

To face globalisation and a new economic environment the Government has

taken several steps High value-added capital intensive and knowledge-

based activities are on the priority list The Information Technology sector is

undergoing rapid changes so as to be fit for the next millennium The aim is to

make Mauritius a centre for high-tech and software services which can be

exported (Commonwealth Secretariat 2006)

8

12 An Overview of Mauritian Economy

The economy of Mauritius has experienced major structural transformation

over the last two decades The country has moved away from a mono-crop

economy with fast population growth high unemployment and low per capita

income to one that is more dynamic and diversified The sources of

diversification have been agriculture export manufacturing (mainly textile)

tourism and more recently international services with Offshore and Freeport

activities (Country profile 2005)

To respond to the global competition in these sectors Mauritius has made

extensive use of modern technology to improve its productivity and efficiency

The real growth rates have been around 54 over the past four years and

Mauritius is now classified as a middle-income country and is one of the

healthiest economies in the whole African region (Country profile 2005) The

sugar sector provided the start-up capital for the Export Processing Zones

(EPZ) The rapid rate of growth of investment in the manufacturing sector

(investment grew by over 30 each year from 1983 until the late 1990s in this

sector) that led to the success of the EPZ and the Mauritian economy as a

whole This was made possible by the confidence of entrepreneurs and

foreign investors prevailing in the country at that particular time The private

sector accounts for approximately 70 of total capital formation in Mauritius

Investment rate stood around 27 in the four years ending 1996 peaking to

30 in 1994 (SMIDO 1996)

9

When the government recommended the diversification of the economy with

the creation of Export Processing Zones in the early 1980‟s the EPZ sector

benefits from duty-free and quota free access into European Union markets

granted under the Lomeacute Convention as well as tariff preferences granted

under the General System of Preferences (GSP) by countries such as North

America and Japan The mid 1980s witnessed a textile boom raising per

capita incomes and living standards However the conclusion of the Uruguay

Round (General Agreement on Trade amp Tariffs) implies the loss of guaranteed

markets and preferential access which will result in strong competition in

these respective markets (Country profile 2005)

The new strategy of the industrial sector aims at targeting high quality and

high value added products with a view to restoring the competitiveness of the

goods by applying latest technology to the manufacturing industry and hence

improving the quality of the finished products Limited data is available

regarding the SME sector in Mauritius The current research has observed

that there is little research in the field in SME sector in Mauritius

In view of the importance of foreign investment as a source of sustenance to

economic growth the government of Mauritius has taken a series of policy

measures to encourage its flows into manufacturing offshore banking and

financial services information technology communication and tourism As far

as foreign investors are concerned Mauritius offers itself as an attractive

destination because several positive features such as political stability

10

availability of skilled labour and investment-friendly rules and institutions

(Stone 1997)

With such a promising economy there is virtually no evidence on how to

penetrate the business culture in Mauritius and how culture can affect SMEs

and business opportunities therefore this study will explore and understand

the business environment in Mauritius and the challenges of doing business

there as a foreign investor Currently there is very little research done on

SMEs and culture in Mauritius

13 Mauritius SME Background

Experience shows that attitudes towards small business vary from decade to

the next from country to country Before the industrial revolution all business

was small business but with industrial and commercial expansion of

developed nations small has become medium and medium has become big

business

Business owners and managers have often seen growth as an end in itself

and at time the cry get big or get out has been heard in most nations

(Meredith 2004) For more than two decades SMEs have experienced

favourable growth SME has long been prominent in the countrys economy

and make up a large portion of national economy in terms of output

employment and effective utilisation of regional resources Small and medium

enterprises in Europe make up 998 of all European enterprises provide

66 of its jobs and account for 65 of its business turnover (Meredith 2004)

11

In developing countries SMEs account more than 90 of all enterprises

Over the last five years they have been responsible for more than 80 of job

created (Stone 1997) On the issue of job creation Stone (1997) found that

SMEs create more employment than large enterprises and with a lower

investment per job created SMEs are not usually associated with international

activity but they do in fact play a significant international role and their

importance appears to be increasing Available data on SMEs international

activity are very limited (Stone 1997)

In general terms and depending on the country SMEs contribute between

15 and 50 of exports and between 20 and 80 of SMEs are active

exporters Overall it is estimated that SMEs now contribute between 25 and

35 of world-manufactured exports (UN 2005) Increased exports not only

boost the level of sales and employment but also extend the life cycle of

goods and services

In Mauritius SMEs represent 19 according to a report issued by the

Commonwealth Secretariat entitled a Study of Small Firm export Policies

and Institutions in Mauritius Subsequently these SMEs have developed

gradually and move from their tradition orientated operations to export-led

firms probably due to improvement of technology in the field of communication

and the new economic dimension which prevailed

At this juncture it is important to report that few studies on culture and small

and medium entrepreneurship have been conducted on Sub-Saharan Africa

12

There is a paucity of information and even those scarce studies they do not

cover broad perspectives of the situation of SMEs in Sub-Saharan Africa

Therefore this study builds upon the existing limited body of research

regarding how business cultures contribute to the success or failure of small

and medium entrepreneurs In particular it explores the business culture in

Mauritius and its barriers to penetration for new and foreign small and

medium entrepreneurs

14 Purpose Statement

The purpose of this study was to understand the concept on how to penetrate

an international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

15 Aims and Objectives

To investigate the challenges of national cultural differences in

business in Mauritius

To investigate how to penetrate the business environment for a new

and or foreign business culture especially in Mauritius

To investigate business opportunities for SMEs in Mauritius and how

these can benefit the locals

13

16 Research Question

How can Small and Medium Enterprises penetrate the business culture in

Mauritius

These sub-questions all pertain to SMEs business

o 161 SUB-QUESTIONS

What kind of businesses are operating in Mauritius now

What are their business strategies (marketing brands) etc

What are the necessary mechanisms for establishing business in

Mauritius

What are the business needs of established and starting businesses

What are the mechanisms for potential growth of local business

What are the challenges for doing business in Mauritius

How much of business behaviour is influenced by the national culture

17 The Significance of the Study

The findings of the current study will increase the understanding of cultural

barriers to market penetration for SMEs in Mauritius The study adds

knowledge to the body of literature in this area focusing at further

improvement of understudying of culture and business issues The

study becomes part of the universitys education development in line with its

obligations to the communities and the country This research problem arose

from an information need of a particular client This research therefore will try

to explore the client‟s information need and probably contribute to the wealth

of knowledge

14

18 Definitions

CULTURE Hofstede (1997) defines culture as ldquothe collective programming of

the mind which distinguishes the members of one group or category of people

from anotherrdquo It is the norms beliefs and values common to a society

Culture is about the way people understand their world and make sense of it

It only when this is taken for granted assumptions are challenged that people

realise that they even exist (Hofstede 1997)

ENTERPRISE An enterprise is considered to be any entity engaged in an

economic activity irrespective of its legal form This includes in particular

self-employed persons and family businesses engaged in craft or other

activities and partnerships or associations regularly engaged in an economic

activity (European Commission 2003)

INTERNATIONAL BUSINESS International business consists of transactions

that are devised and carried out across national borders to satisfy the

objectives of individuals and organizations The Primary Types of International

Business Activities Are Importing and Exporting Direct Foreign Investment

(Govindarajan and Gupta 2001)

GLOBALISATION refers to a bdquogrowing economic interdependence among

countries as reflected in the increased cross-boarder flow of three types of

entities goods and services capital and knowhow‟ (Govindarajan and Gupta

2001 4)

15

SMALL AND MEDIUM INTERPRISES (SME) is made up of enterprises

which employ fewer than 250 persons and which have an annual turnover not

exceeding EUR 50 million andor an annual balance sheet total not

exceeding EUR 43 million (European Commission 2003)

In Mauritius an SME has been redefined taking into account the volume of

investment in equipment which was previously one million up to 10 millions

Mauritian Rupees presently to be classified as a small enterprises and with

less than 50 and 200 employees for small and medium scale respectively

(Stone 1997)

16

CHAPTER TWO

LITERATURE REVIEW

The aim of this chapter is to introduce conceptual themes that are important in

order to understand the role of culture in international business The chapter

discusses the context of relationship between culture and international

business practices in small and medium enterprises (SMEs) and the major

challenges they face in the area of globalisation A model adopted from Putz

(2000) forms a framework for articulating the conceptual role that culture has

in international business using Mauritius as a case study

21 Embracing Cultural change in an era of globalization

A significant theoretical issue for international business is the role of culture in

the whole aspect of information transformation Since the landmark study by

Haire et al (1966) and the publication of Industrialism and Industrial Man by

Kerr et al (1960) researchers have continued to search for similarities in

culturally specific beliefs and attitudes in various aspects of work related

attitudes as well as consumption patterns and other behaviours If cultures of

the various communities of the world are indeed converging (Heuer et al

1999) International Business (IB) related practices would likely become

increasingly similar For example standard culture-free business practices

would emerge and inefficiencies and complexities associated with divergent

beliefs and practices in the past era may disappear (Heuer et al 1999)

17

Studies elsewhere suggest that culture gets affected by globalization practices

in the current 21st century Globalization has seen flows of information

technology money and people and is conducted via international

government organizations such as the African Union the North American

Free Trade Agreement (NAFTA) and the European Community global

organizations such as the International Organization for Standardization

(ISO) multinational companies (MNCs) Also includes cross-boarder alliances

in the form of joint ventures international mergers and acquisitions These

interrelationships have enhanced participation in the world economy and

have become a key to domestic economic growth and prosperity (Drucker

1995 153)

Literature suggests that because globalization tends to redistribute economic

rewards in a non-uniform pattern a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) Strong opposition to

globalization usually originates from developing countries that have been

affected by the destabilizing effects of globalisation However in recent years

there have been heated debates in Western economies triggered by

significant loss of professional jobs as a result of offshoring to low wage

countries (Schaeffer 2003)

Workers in manufacturing and farming in advanced economies are becoming

increasingly wary of globalization as their income continues to decline

18

significantly In parallel to the angry protests against globalization the flow of

goods services and investments across national boarders has continued to

fall after the rapid gains of the 1990s The creation of regional trade blocs

such as NAFTA the European Union and the Association of Southeast Asian

Nations have stimulated discussions about creating other trade zones

involving countries in South Asia Africa and other parts of the world

Although it is often assumed that countries belonging to the World Trade

Organization (WTO) have embraced globalization the fact is that the world is

only partially globalized at best (Schaeffer 2003)

Many parts of Central Asia and Eastern Europe including the former

republics of the Soviet Union parts of Latin America Africa and parts of

South Asia have raised heightened scepticism about globalization (Greider

1997) In fact less than 10 of the world‟s population are fully globalized (ie

being active participants in the consumption of global products and services)

(Schaeffer 2003)

According to Guile`n (2001) these trends might indicate that globalization is

being impeded by tendencies towards country-specific modes of economic

development making the convergence of IB-related values and practices

difficult to achieve Hofstede (1980)‟s favourite definition of f ldquoculturerdquo is

precisely that its essence is ldquocollective mental programmingrdquo it is that part of

peoples conditioning that they share with other members of their nation

region or group but not with members of other nations regions or groups

Hofstede (2001) asserts that these mental programs of people around the

19

world do not change rapidly but remain rather consistent over time His

findings tend to suggest that cultural shifts are relative as opposed to

absolute Although clusters of some countries in given geographical locales

(eg Argentina Brazil Chile) might indicate significant culture shifts towards

embracing Anglo values the changes do not diminish the absolute differences

between such countries and those of the Anglo countries (ie US Canada

UK)

According to Hofstede (1980) Examples of differences in mental

programming between members of different nations can be observed all

around us One source of difference is of course language and all that

comes with it but there is much more In Europe British people will form a

neat queue whenever they have to wait not so the French Dutch people will

as a rule greet strangers when they enter a small closed space like a railway

compartment doctor‟s waiting room or lift not so the Belgians Austrians will

wait at a red pedestrian traffic light even when there is no traffic not so with

the Dutch Swiss tend to become very angry when somebody-say a foreigner

makes a mistake in traffic not so with the Swedes All these are part of an

invisible set of mental programs which belongs to these countries‟ national

cultures Such cultural programs are difficult to change unless detaches the

individual from his or her culture Within a nation or a part of it culture

changes only slowly (Hofstede 1980)

20

This is the more so because what is in the minds of the people has also

become crystallized in the institutions namely government legal systems

educational systems industrial relations systems family structures religious

organizations sports clubs settlement patterns literature architecture and

even in scientific theories All these reflect traditions and common ways of

thinking which are rooted in the common culture but may be different for other

cultures (Hofstede 1980)

22 The dynamics of Culture as a Multi-level Multi- layer construct

Multi-level approaches of viewing culture as a multi-level construct that

consists of various levels nested within each other from the most macro level

of a global culture through national cultures organisational cultures group

cultures and cultural values represented the self aspect of the individual See

figure 3

21

Figure 3 The dynamic of top-down-bottom up process across levels of

culture (Source Schein 1992)

The model proposes that culture as multi-layer construct exist at all levels

from global to the individual Changes that take place at the external layer of

behaviour are most likely shared by individuals who belong to the same

cultural background level hence characterising the aggregated unit (Schein

1992)

Top-

Down

Individual

Behaviour

Values

Assumptions

Global Culture

National Culture

Organizational Culture

Group Culture

Bottom

Up

22

Below the global level are nested organizational layers or networks at the

national level with their local cultures varying from one nation or network to

another Further down are local organizations and although all of them share

some common values of their national culture they vary in their local

organizational cultures which are also shaped by the type of industry that

they represent the type of ownership the values of the founders etc Within

each organization are sub-units and groups that share common national and

organizational cultures but differ from each other in their unit culture based on

differences in functions of their leaders‟ values and the professional and

educational level of their members At the bottom of this structure are

individuals who through the process of socialization acquire the cultural values

transmitted to them from higher levels of culture Individuals who belong to the

same group share the same values that differentiate them from other groups

and create a group-level culture through a bottom-up process of aggregation

of shared values (Schein 1992)

Both top-down and bottom-up processes reflect the dynamic nature of culture

and explain how culture at different levels is being shaped and reshaped by

changes that occur at other levels either above it through top-down

processes or below it through bottom-up processes(Schein 1992) Similarly

changes at each level affect lower levels through a top-down process and

upper levels through a bottom-up process of aggregation The changes in

national cultures observed by Inglehart and Baker (2000) could serve as an

23

example for top-down effects of economic growth enhanced by globalization

on a cultural shift from traditional values to modernization

In view of the complexity of the organizational structures specific

organizational structures that have global character need to be established so

as to adopt common rules and procedures in order to have a common

bdquolanguage‟ for communicating across cultural borders (Kostova 1999 Kostova

and Roth 2003 Gupta and Govindarajan 2000)

Given the dominance of Western Multi National Companies (MNCs) the

values that dominate the global context are often based on a free market

economy democracy acceptance and tolerance of diversity respect of

freedom of choice individual rights and openness to change (Gupta and

Govindarajan 2000) The multi-level structure explains how a lower-level

culture is being transformed by top-down effects and that the cultural layer

that changes first is the most external layer of behaviour In the long run

bottom-up processes of shared behaviours and norms would affect the local

organizational culture as well (Schein 1992)

23 International Business and Culture

Knowledge of cultural differences is one of the key components in

international business practices and success Improving levels of cultural

awareness can help companies build international competencies and enable

individuals to become more globally sensitive (Hofstede 2003) Indeed

cultural differences contribute towards different ways people behave in

24

business Research in the field of international management underscores that

the attributes of cultural knowledge used by a firm play an important role in the

firms expansion For example Martin and Salomon (2003) found that cultural

orientation in entrepreneurial action is a central theme and can serve as a

starting point for immigrant business

ldquoUnderstanding the culture and the conceptualisation of culture in conjunction with entrepreneurial action is a critical issue when doing business in an international environment Contributions of economic geography inspired by the cultural turn which shows alternative ways of thinking about the connection between culture and economy by using a new understanding of culture are also critical (pg 198)rdquo

The statement underscores the important of understanding the culture of a

society before attempting to do business there otherwise the company runs a

risk of going out of business The ways in which different groups of people

interpret their environment and organise their activities is based the on the

specific cultural values and assumptions Certain values often thought to be

universal really do differ from culture to culture What constitutes an ethical

business practice is not the same everywhere This can be an enormously

difficult area in managing business across cultures (Straub et al 2002)

Although one may claim cultural differences to be going away they are

actually being absorbed in the business practices This makes it more critical

than ever to try to understand different cultures and their influence on the

ways people do business and view the world The costs of not understanding

are getting greater than ever The essence of culture is not what is visible on

the surface It is the shared views about what people understand and interpret

25

the world These cultural differences are crucial influences on interactions

between people working and managing across culture (Gertler 1997)

The social behaviour of a society is embedded in a particular context and is

connected to other deeply held values and beliefs (Weisinger and Trauth

2003) This means that the stakes are high for mismanaging cultural

differences Ignoring or mishandling differences can result in an inability to

retain and motivate employees a misreading of the potential of cross-border

alliances marketing and advertising blunders and failure to build sustainable

sources for competitive advantage Mismanaging cultural differences can

render otherwise successful managers and organisations ineffective and

frustrated when working across cultures (Weisinger and Trauth 2003)

24 Putz Model For Immigrant Business and Culture

Literature in the field of Immigrant Business differentiates mainly between two

basic approaches each with a different emphasis which are combined to

explain entrepreneurial action of immigrants (Putz 2000) The first approach

emphasis the bdquoopportunities‟ offered by the host country including access to

the market and job market conditions The second approach focuses on the

bdquoresources‟ of migrant groups from whom the concept of culture becomes

essential (see Figure 1 below)The Putz (2000) cultural model below is a

summary of explanatory approaches following the assumption that self

employment of certain groups is the result of their specific cultural

predisposition which favours business activity

According to Putz‟s (2000) view of cultural model the bdquoopportunities‟

approach which refers to market possibilities as an explanation for self

26

employment of immigrants assume that there are certain market segments

with favourable development perspectives especially for immigrant groups

Here two factors receive special attention which are niche markets and legal

and institutional frameworks Niche markets make the establishing of business

by immigrants easier because their needs for consumer goods create specific

demand Legal and institutional frameworks gain awareness in international

comparative studies through restrictions specified by a country regarding

business permits and regulations these frameworks influence both the extend

and the sectored structure of the bdquoimmigrant business‟ (Putz 2000)

According to Putz (2000) the observation that most immigrant groups show a

higher level of self employment rate than others often forms the background

explanation which focus on opportunities created by the host society

Resource models stress the shared characteristics of migrants of same origin

Resources models explain that certain groups have specific cultural

resources which make it easier for members of that group to become self

employed therefore one can distinguish between the cultural traditions and

socialethnic networks ( Putz 2000)

27

Figure 4 Dominating models concept of bdquoImmigrant Business‟ (Source Putz

2000)

OPPORTUNITIES

Market Access

Possibilities

Market Conditions

Niche Markets

lsquoOpenrsquo Markets

Job Market

Conditions

Access

Vertical Mobility

Legal and Institutional

Frameworks

lsquoEthnicrsquo

Business

RESOURCES

lsquoClass Resourcesrsquo lsquoCultural Resourcesrsquo

Cultural

Traditions

Social lsquoEthnicrsquo

Resources

28

When successfully managed differences in culture can lead to innovative

business practices faster and better learning within the organisation and

sustainable sources of competitive advantage (Sondergaard and Hofstede‟s

1994) In relation to that the current study argues that managers need to

study and understand the culture and the niche market before investing This

assumption has been raised as a result of the previously reported experiences

and research findings already reported so far It is therefore critically important

to understand that every society has got its own way of behaving which needs

to be understood if the business is to succeed Operating companies need to

understand what their business means to the people of the given community

and their culture

Several studies of international business have indicated that

internationalization of the firms is a process in which the firms gradually

increase their international involvement(Johanson amp Wiedersheiml 1995

Gibson 1999 Chui et al 2002 ) It seems reasonable to assume that

within the frame of economic and business factors the characteristics of this

process influence the pattern and pace of internationalization of firms Figure

5 below shows a model of the internationalization process of the firm that

focuses on the development of the individual firm and particularly on its

gradual acquisition integration and use of knowledge about foreign markets

and operations and on its successively increasing commitment to foreign

markets The basic assumptions of the model are that lack of such knowledge

is an important obstacle to the development of international operations and

that the necessary knowledge can be acquired mainly through operations

abroad (Johanson and Wiedersheiml1995)

29

FIGURE 5 The Basic Mechanism of Internalisation- State and Change Aspects

Figure 5 Basic Mechanism of Internalisation (Source Johanson amp

Wiedersheiml 1995)

Market knowledge and market commitment are assumed to affect both

commitment decisions and the way current activities are performed These in

turn change knowledge and commitment ( Aharoni 1966) In the model it is

assumed that the firm strives to increase its long-term profit which is

assumed to be equivalent to growth (Williamson 1966) The firm is also

striving to keep risk-taking at a low level These strivings are assumed to

characterize decision-making on all levels of the firm Given these premises

and the state of the economic and business factors which constitute the frame

in which a decision is taken the model assumes that the state of

internationalization affects perceived opportunities and risks which in turn

influence commitment decisions and current activities (Johanson amp

Wiedersheiml 1995)

Market

Knowledge

Market

Commitment

Commitment

Decisions

Current

Activities

30

2 5 The Role Of Information Communication Technologies

Hofstede (2001) observed that not only will cultural diversity among countries

persist but also new technologies might even intensify the cultural differences

between and within countries Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

Information communication technologies (ICTs) enable users to access varied

amounts of information globally however it does not necessarily increase

their capacity to absorb the information at the same rate as the information is

disseminated or diffused (Bhagat et al 2002) In addition information and

knowledge are interpreted through cultural lenses and the transfer or diffusion

of organizational knowledge is not easy to accomplish across cultural

boundaries (Bhagat et al 2002)

Ethnic groups around the world observe the lifestyles and cultural values of

other countries and some are interested in adopting part of the lifestyle and

values but others reject it completely (Kirkman and Shapiro 2000) The

effects of new technologies on improving efficiencies of multinational and

global corporations are well known but it is not known how these new

technologies especially computer-mediated communication and the Internet

31

might create significant shifts in the cultural patterns of different ethnic groups

(Kirkman and Shapiro 2000) or on their ways of doing business

In essence there in need to explore how the spread of ICTs is affecting the

progress of globalization in different parts of the world by incorporating the

role of cultural syndromes organizational cultures and other processes

which has recently been attempted by scholars such as Bhagat et al (2003)

and Gibson and Cohen (2003)

Information and Communications Technology (ICT) has become a catchword

with different interpretations and viewpoints even among experts As the

name suggests ICT encompasses all the technology that facilitates the

processing transfer and exchange of information and communication

services In principle ICTs have always been available since the advent of the

printing press The only difference is that from the late twentieth century rapid

advances in technology changed the traditional ways in which information was

processed communications conducted and services available (Adu 2002)

These technological advances have changed business operations and the

way people communicate They have introduced new efficiencies in old

services as well as numerous new ones One could even imagine going as far

as replacing the term Post-industrial Society with ldquoInformation Society that

is a society where the ability to access search use create and exchange

information is the key for individual and collective well-being (Kaplan 2001)

32

Globally entrepreneurship is considered as the engine of economic

development The SME sector has the potential to address socio-economic

challenges facing both developing and developed countries Without small

business development it is argued that economies stagnate unemployment

levels continue to rise and the general standard of living deteriorates

Information and communications technology (ICT) has been identified as a

major area of need to develop the SME sector in areas of information

provision access to national and international markets and other areas of

business development and support ( Ferrand and Havers 1999)

ICTs enable entrepreneurs to manage their businesses efficiently and thus

enhancing their competitiveness in the global market They can increase their

geographic reach improve efficiency in procurement and production and

improve customer communications and management For these reasons the

need to encourage and accelerate the uptake and optimal application of ICTs

by SMEs in different sectors of the economy cannot be overemphasized

(Ramsay et al 2003) The ICT sector has the potential to absorb prospective

entrepreneurs considering various business opportunities offered by the

sector Some of the business opportunities available within the sector relate to

systems integration application development database administration web

design and internet service provision The sector is also seen as an area with

major opportunities for the historically disadvantaged sectors of the

population It therefore becomes imperative for government to provide

mechanisms to accelerate the entry of SMMEs into the ICT sector (ILO 2001)

33

26 Cross Culture and International Business

Cross-cultural management advice rests on several assumptions in the

tradition of Hofstede (1997) that a) that national culture is comprised of norms

and values that can be readily identified and addressed b) that these norms

values and patterns of behaviour are stable and change at an extremely slow

pace and c) that national culture predominates over organizational culture

epistemic culture gender or other determinants of attitudes and behaviour

According to Hosftede (1997) national culture is comprised of norms and

values that can be readily identified and addressed

Organisational culture (common values and attitudes) affects organizational

success and innovation develops over time and may be difficult to change

ldquoThere is a relationship between an organization‟s culture and its

performance The pervasive nature of organizational culture means that if

change is to be brought about successfully this is likely to involve changes to

culturerdquo (Mullins 1999)

An alternative view sees culture as more complex context-specific and

dynamic For example Weisinger and Trauth (2003) examined the interaction

of national cultures the IT industry culture and a particular firm‟s

organizational culture They observed that the resulting situated culture ldquois

fluid contextually dependent and created by actors within a group who may

hold conflicting assumptions and world viewsrdquo In other words culture is as

what it is because of what it does This means that management must ensure

34

that key capabilities for example marketing analytics or process controls are

developed and nurtured across the organization

Successful global managers recognize that they cannot respond to every

unique opportunity that local settings offer Thus there is an inherent tension

in cultural sensitivity a management team which is ldquotoo sensitiverdquo to cultural

and structural features exposes the organization to the risks that come with a

lack of focus and coherence while managers who do not take cultural and

structural features into account expose the organization to the risks that come

with organizational rigidity (Myres and Tan 2002)

According to Mistry (1999) entrepreneurial networks and clusters in sub-

Saharan Africa have not generally produced the kind of strong transnational

links that characterize Asia‟s flourishing pattern of industrial diffusion The

author states that the reasons for this are complex differences in geography

different models provided by leading countries in the neighbourhood and

policies adopted by governments in the respective regions Chinese business

networks are responsible for some of the information ideas and capital that

helped launch the small Indian Ocean nation of Mauritius as an important

centre for export-oriented industry The Chinese networks in Mauritius also

continue to facilitate a role that Mauritius first began to play in the eighteenth

century they serve as a gateway for overseas Chinese entrepreneurs

interested in investing both in Mauritius and elsewhere in Africa (Mistry 1999)

35

27 Investing in Mauritius

There are a lot of advantages in investing in Mauritius The economy of the

country is stable and the graph of the economy and business is one the rise

for a considerable period of time The Mauritius government has undertaken a

sequence of strategic measures to support its course into offshore banking

manufacturing and financial services communication technology and tourism

keeping in mind the significance of foreign investment as a basis of

nourishment of the financial development (Dabee and Greenaway 2001)

According to Dabee and Greenaway (2001) tthere are various factors that

influence financiers to invest in Mauritius like accessibility of skilled labor

political constancy and venture-friendly institutions and regulations One of

the major factors for the development of Mauritius is the Foreign Direct

Investment (FDI) The government of Mauritius has given all the necessary

support to create the most favorable investment setting by the following steps

Building modern infrastructure

Endorsing suitable legislations

Commencing packages of investment inducements

Investing in human capital

Some of the advantages of investing in Mauritius are as follows

High-quality infrastructure with superb transportation

Democracy and a steady government

Free market financial system fastened on export slanting activities

Excellent system of sea and air transport

36

High standard of living good international schools

A highly educated bilingual and responsive work force

Knowledgeable financial segment providing outstanding services

Constructive market contact and good inducements ( IBP 2002)

Mauritius has various sectors where investment can be made like Information

and Communication Technology and manufacturing For doing business in

Mauritius registered trademark is required The trade marks for business are

issued by the registered Patents and Trademarks sector of Ministry of Foreign

Affairs International Trade and Cooperation In the country of Mauritius a

foreigner is eligible to hold 100 shares In this case one of the directors of

the company has to inhabit in Mauritius and the foreign individual has to

obtain a sanction from the Office of Prime Minister (IBP 2002)

In Mauritius the laws concerning income tax is based on the English law of

income tax The companies in Mauritius are lawfully accountable to pay out

income tax on their profits at an even rate of 25 A company which is

included in the country or has its scheming benefit in the country is measured

for tax reasons to be an occupant corporation To the Mauritius companies

various types of tax incentives are granted The companies that hold

certificate for Tax inducement are responsible to tax at an abridged rate of

15 while the scheduled companies are accountable to pay tax at the rate of

25 ( Dabee and Grrenaway 2001)

37

CHAPTER THREE

METHODOLOGY

Having looked at culture to some depth this chapter explains the methods

used in carrying out the study The study used mixed method approach to

allow for data corroboration and dynamism since the subject in question

needed dynamism and sensitivity in approach

This research mixed both qualitative and quantitative approaches to try and

get best possible research by combining both features because they

complement each other Quantitative data techniques condense data in order

to get a bigger picture whereas qualitative techniques are data enhancers

making it possible to see issues more clearly (Dawson 2002 Neuman 2000)

Attempt was made to keep in line with recommendation made in the Leeds

Declaration proposition number 6 which calls for the application of multiple

methods and perspectives to try and understand social and cultural issues

(Hunter and Lang 1993) Mixing qualitative and quantitative methods also

called positivist and interpretive respectively (Gilbert 2001 and Bowling 2002)

is effective in a complex issue study such as this one because they highlight

different perspectives of the same problem in this case - the public in parallel

with the individual level(Gilbert 2001) This is because quantitative methods

adopt a numerical approach to data collection and analysis to provide macro

level perspective whereas qualitative methods provide micro level perspective

through collecting data from individuals (Ibid)

38

There was also use of impersonal (public) documentation using official

records which were more library based research (Grbich 1999) on top of

theory generating field based methods (Ibid) Many researchers (Bowling

2002 Neuman 2000 Grbich 1999 Denscombe 2003 and Gilbert 2001)

concur that neither of the methods is superior to the other but just different

each having its strengths and weaknesses (Dawson 2002)

The study sought to explore the attitudes behaviour subjective meanings and

experiences of the participants making qualitative approaches best suited

because they emphasize the importance of context (Neuman 2000) However

to generate objective and factual (Maynard and Purvis 1994) statistical

figures quantitative research was more suitable Hence mixing of methods

(Dawson 2002 Denscombe 2003) to counteract weaknesses in both

approaches to give breadth and width to the study (Maynard and Purvis

1994) The flexibility of qualitative research allowed for re-focusing and

refinement of the tool dependent on participants‟ reactions throughout

(Neuman 2000) to pick up any emerging evidence thus applying the

grounded theory approach (Dawson 2002)

39

31 Research Setting

Mauritius is a volcanic island of lagoons and palm-fringed beaches in the

Indian Ocean Southern Africa east of Madagascar with a population of

about 12 million has a reputation for stability and racial harmony among its

mixed population of Asians Europeans and Africans The island has

maintained one of the developing worlds most successful democracies and

has enjoyed years of constitutional order since independence in1968 Over

the past three and half decades the country has been transformed from one

of the poorest in the world to a middle income country with per capita Gross

Domestic Product US $7000 (World Bank 2006) It has preserved its image

as one of Africas few social and economic success countries that mainly

depends on sugar and clothing export and a centre for upmarket tourism But

Mauritian exports have been hit by strong competition from low-cost textile

producers and the loss of sugar subsidies from Europe Consequently

attention has turned to diversification in line with global trends

To this end SMEs have been identified as important instruments to achieve

economic diversification Today the government vigorously supports SMEs

through a range of strategies eg the creation of a business friendly climate

via import liberalisation tax reforms and the launch of the SME Partnership

fund which gives subsidized loans to aspirant SME owners and makes the

availability of finance and facilitating access in particular for those enterprises

that have viable projects but are short of equity The Small Enterprises amp

Handicraft Development Authority (SEHDA) was created following the merger

of the Small amp Medium industries Development Organisation (SMIDO) and the

National Handicraft Promotion Agency (NHPA) The aim of the merger is to

40

rationalize and optimize the use of resources dedicated to the small business

sector in Mauritius

Various cultures and traditions flourish in peace though Mauritian Creoles

descendants of African slaves who make up a third of the population live in

poverty and complain of discrimination Mauritius was uninhabited when the

Dutch took possession in 1598 Abandoned in 1710 it was taken over by the

French in 1715 and seized by the British in 1810 The culture of the country

reflects its diverse ethnic composition There are many religious festivals

some important ones being (in random order) Divali (the hindu festival of

lights in October) Christmas Cavadee (a penitence festival of the south

Indian tradition of hinduism in January) Eid ul Fitr (celebrating the end of the

period of fasting in Islam As the Islamic calendar does not correspond to the

Gregorian calendar the date of its celebration in the year tends to vary In

2003 it was celebrated in November) With such a strong history diverse

culture and such a promising economy painted above makes Mauritius a rich

setting to investigate culture and small medium business entrepreneurship

32 Methods

As justified already this study applied method mix to exploit the benefits of all

methods used while minimising the effects of their weaknesses The obvious

benefit of method mix is that it involves more data which is likely to improve

the quality of research (Denscombe 2003) and that is what the researcher

sought to achieve In deciding which method to use it was acknowledged that

the chosen methods were not superior in any way but more suited to the study

41

circumstances based on the premise of ldquohorses for courses (Denscombe

2003 page 83)

A Questionnaire used in the online web survey allowed for collection of

data from large numbers of participants economically since the project had

financial and time limitations (Ibid) The other advantage of survey exploited is

generation of quantitative data However weaknesses of the method

(empiricism lack of depth and accuracy of responses) were a challenge The

questionnaire was open ended and was completed by the participant in the

absence of the researcher Any questions arising from the participant not

understanding or misinterpreting the question where not taken care of Focus

groups were used to gain depth into some of the emerging issues from

questionnaires to gain insights into the issues surrounding widow inheritance

and to validate some of the data (Denscombe 2003) Telephone and face to

face interviews were used to gather to gain in-depth information on the

issues

All accessible literature on culture and investment in Mauritius as well as

other parts of Africa was reviewed to get insight into any related work to

identify key issues and current knowledge gap so as to sign post this study for

any audience (Ibid)

42

33 Research Participants and sampling

It was difficult to get exact demographic data for each sector Consequently it

was not possible to use any scientific sampling techniques The study

therefore used non-probability sampling (Neuman 2002 Bowling 2002

Denscombe 2003) targeting urban based population

The sample baseline characteristics were

SME managers from aged 18 years and above and over 65 was the

limit Any religion faith Any socio-economic background and residents

of Port Luis and surrounding areas

To sample for quantitative data purposive and snowballing sampling

techniques were used because it was not possible to apply any statistical

formula in getting the samples since there was no single list of SME managers

and other stakeholders to use with any form of probability sampling

Participants were snowballed from one sector to another until the whole

sectors were covered For the focus groups homogenous and critical case

(Grbich 1999) sampling was used to get particular sub group to provide

details In this case to get government officials and the private sector who

were strong enough to talk about their experiences

A total of 161 participants were reached from all the sectors These included

SME manager government officials and the private sector The researcher

wishes to point out that these numbers were not conclusive The numbers

could be much higher because in case the researcher phoned the participants

they were not available to take the call there was no time to go back to

43

ascertain the details Those who were not willing to take part in the study were

also excluded from the above figures For the focus groups discussions 5

government officials and the private widows were invited and used Skype

technology to do a conference

The times when the participants were contacted met were entirely dependent

on participant availability and other events at the time (Gilbert 2001) It varied

between 800 am and 700 pm in the evening because of the time differences

UK and Mauritius time Care was taken to avoid compromising times such as

late in the evening or culturally sensitive days such as weekends when people

were engaged in funerals and church services in this case

The participants showed weariness towards the study because as they put it

ldquoa lot of people come along claiming to collect data to help but never show up

againrdquo

34 Data collection Instruments

The researcher developed an online quantitative data collection questionnaire

(web survey form) which was posted on the university web server with help of

the department technicians A multiple recipient list was created from the

details in the SEHDA website and was randomly sent to the recipients These

only included the SME managers from the seven sectors About 20 contacts

were selected from each sector which made a total of 140 participants

Telephone interviews were made to about 17 government officials and the

private sector who were later divide n to focus groups and a teleconferencing

44

was organised on Skype Face to face interviews were done with government

officials from the Mauritian High Commission in the UK

Apart from the questionnaire an Olympus VN 2100 PC Digital Voice Recorder

was also used during the focus group discussion with the permission of

participants also on telephone interviews and face to face interviews This

was tested set and correctly positioned by the telephone speaker before the

session began to ensure proper functioning It was fitted with a mini

microphone to improve recording quality The digital voice recorder small in

size (only 68 grams in weight) proved user friendly because it was not

intruding too much into the face of participants as opposed to older recording

devices There was a pair of AAA batteries on standby in case the batteries in

use ran flat during the session

35 Ethical Considerations

This study involved very little of sensitive issues but it strived very much to

adhere to the fundamental principles of Human Research Ethics of Respect

for Persons Beneficence and Justice The researcher ensured autonomy self

determination and protection of vulnerable persons through informed consent

participation confidentiality and thorough explanation of what the research

was all about to those with limited knowledge and education Any risk that

might have resulted from the study was minimised as much as practically

possible and the researcher took full responsibility for the protection of

participants There was no form of discrimination other than on participant

baseline characteristics

45

The study also upheld the six key ethical research principles as stipulated by

ESRC - UK (ESRC 2005) To ensure anonymity pseudonyms were used for

participants The information gathered was safely protected through password

use on the computer system and only the researcher had access to the

information The researcher was responsible for storage and destruction of

any information no longer needed such as audio files after transcription

Research respondents participated in a voluntary way free from any coercion

and free to withdraw at any point should they felt uncomfortable

The first ethical committee whose approval was sought was the University of

Sheffield Ethical committee after which the researcher sought ethical approval

from Mauritian authorities through the relevant ministries It was not straight

forward getting ethical approvals in Mauritian but ultimately the ministry of

SMEs approval was obtained

36 Procedure

After all the necessary approvals were obtained the researcher wrote an

explanatory letter (Grbich 1999) or bdquoparticipant‟s information sheet‟ (appendix

5) which included information on informed consent (Denscombe 2003)

After piloting the tools the researcher started by making calls to make

appointment for interviews As the quantitative data collection went on

recruitment of participants to take part in qualitative aspect was done

simultaneously due to time constraints The researcher used individual

judgement to asses those participants who would be courageous enough to

respond to the questionnaire online and to the interviews The managing

46

director for RCBusiness Support Ltd also provided a number of potential

respondents who were used at the initial stages of the study Each interview

session lasted averagely 50 minutes The researcher went to organise the

teleconferencing for the focus group on Skype which also lasted for average

50 minutes

37 Data Analysis

Since the distinction between quantitative and qualitative research is not

watertight (Denscombe 2003) data analysis embraced both because they

have similarities and differences (Neuman 2000) There was analysis of

words and numbers thus holistic versus specific focus (Denscombe 2003)

The analysis adopted a five stages approach (Denscombe 2007) The first

stage was data preparation followed by data exploration analysis

presentation and finally validation

Though some researchers champion for advanced inferential statistics

(Denscombe 2007) the researcher opted for descriptive statistics for the

quantitative data analysis because they still remain effective ways of data

analysis and presentation (ibid) The research data involved nominal as well

as discrete and continuous data which could effectively be analysed using the

chosen method The data was grouped frequencies were described and

finally any linkages were identified The end product of the analysis process

is presented in the results section in various formats Basic statistical

techniques were used to give the data additional credibility in terms of

interpretations of the findings (Denscombe 2007)

47

For the qualitative data the first thing was to back up the original voice

recorded focus group discussion into a password protected lap top This

ensured not only the security of the data but also a back up in case of data

loss The researcher then listened to the recording several times to familiarise

himself with the data after which transcription took place After that the data

was interpreted and categories themes were identified since thematic

analysis was employed The Putz (2000) model was used as a guide to

finding themes The findings are presented in the results section

38 Planned programme of dissemination

The study findings were disseminated to all relevant stakeholders in print

format including the university as part of the postgraduate degree requirement

in academically fulfilling format Two copies of the report were sent to the

Ministry of SMEs in Mauritius and two copies to the Board of Investment of

Mauritius in the UK as part of the requirements of ethical approval and

research permission granted by the ministry

Finally it was hoped that the report would meet publication requirements so

that it could get a wider audience through a reputable journal

48

39 Time scale

The study was anticipated to take the following breakdown from the time all

ethical approvals and consent were obtained

Table 1 Table showing the study time scale

Stage Time allocation Action item Accountable person

I Weeks 1 - 3 Research set up Sampling and

access to participant negotiations

Angelinah Boniface

II Weeks 4 - 12 Data collection and Analysis Angelinah Boniface

III Weeks 12 - 16 Analysis Report writing and

dissemination

Angelinah Boniface

310 Limitations and Delimitations

This study was not fully funded as such high telephone costs travelling

affected the exercise Only business people in Mauritius both men and women

were interviewed The study covered both local and foreign investors

Participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

49

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

A major limitation is a low response rate of the questionnaire and therefore a

representative sample of the SME population was not achieved Thus any

conclusions made from the analysis of the collected data cannot be

generalized to the broader SME population Bias may have been inadvertently

introduced during interviewing caused from such things as leading questions

50

CHAPTER 4

RESEARCH FINDINGS AND DISCUSSION This chapter aims to discus the research findings from the study The chapter

is divided into two sections the first part presents and discusses the

quantitative data and the second part discusses qualitative It is therefore

worth mentioning that the Putz (2000) model was used to guide the

qualitative data analysis and some of the themes were taken from the model

and some were generated from the research findings It must be noted that

any findings uncovered from this study cannot be generalized to the broad

public domain regarding SMEs

Section A of the questionnaire and the interview guide included questions that

collected background information on the SME managers and the responding

firms These data constitute the substantive material for analysis in the

ensuing sections The tables below depict the socio demographic

characteristics of the survey participants age group gender educational level

and experience as ownermanager In the following sections there aspects

are discussed

51

41 RESPONDENTS RATE ACCORDING TO SECTORS

TABLE 2

SECTOR SEHDAS SURVEY SENT

SURVEY RECEIVED

RESPONSE RATE

Leather and Garments

1678 20 12 60

Wood and Furniture

2196 20 11 55

Paper Products and Printing

1541 20 9 45

Chemical Rubber and Plastic

1376 20 11 55

Pottery and Ceramic

793 20

17 85

Jewellery and Related Items

1674 20 13 65

Fabricated Metal Products

1267 20 14 70

TOTAL 7 140 101 72

Table 2 shows the response rates from various sectors of SME in Mauritius

which were targeted by the online survey As the table indicates pottery and

ceramic sub sector had the highest response rate (85) with paper products

sector giving the least response rate (45) Overall 72 response rate from

all the targeted sectors was satisfactory It is worth mentioning that the total

number of participants adds to 140 since this question was only directed to

sectors not to other stakeholder in the research sample

52

42 DEMOGRAPHIC PROFILE PARTICIPANTS

TABLE 3 AGE GROUP AS PER PARTICPANT

AGE GROUP FREQUENCY PERCENTAGE

-25 7 43

26-35 34 211

36-45 53 329

46-55 35 217

56-65 22 137

gt 65 11 63

TOTAL 161 100

Evidence from most of entrepreneurial literature suggests that self-

employment becomes an increasingly attractive option as one nears middle

ages As can be seen in table 3 respondent‟s ages ranged from 25 to 65 and

the largest proportion (329) of the participants was in the age range of 36ndash

45 Additionally participants were biased towards the age ranges of between

36 and 65 and away from the under 25 and over 65

TABLE 4 GENDER PROFILE AS PER PARTICIPANT

GENDER

Male 116 720

Female 45 280

TOTAL 161 100

53

In relation to gender the research sample was predominantly male (72) a

striking although unsurprising demographic characteristic that reflects the

composition of the larger business sector in the country as a whole

Consequently only (28) were females This is clearly illustrated in table 4

above

TABLE 5 EDUCATION PROFILE AS PER PARTICIPANT

EDUCATIONAL LEVEL

Primary 8 50

Junior-level 29 180

O-level 78 484

Diploma 34 211

Higher Degrees 12 75

TOTAL 161 100

As evident from table 5 the educational levels attained by respondents varied

considerably as follows Primary School Certificate (8 or 5) Junior

Certificate (29 or 180) Ordinary Level (78 or 484) Diploma (34 or

211) and higher Degrees (12 or 75 ) On the whole though the data

suggest that the educational levels of our respondents are low the largest

proportion (398) possessing an Ordinary Level certificate

54

TABLE 6 YEARS EMPLOYED AS CEO AS PER PARTICIPANT

Years Of Employed as CEO

0-3 44 273

4-7 88 546

8-14 15 94

15-19 11 68

Over 20years 3 19

TOTAL 161 100

Not surprisingly table 6 shows that most of the responding executives did not

have education that emphasized a business curriculum This can be

understood with respect to the Mauritian educational curriculum which largely

overlooked business subjects until very recently

The research sample participants had been employed at their current firms on

average 1467 years and had an average of 12 years experience in the

manufacturing industry Four predominant job titles used by the senior

executives emerged from the questionnaireinterview responses Managing

Director (38) Director (26) Manager (20) and Chief Executive Officer

(16)

55

43 CHARACTERISTICS OF RESPONDING FIRMS

This section presents the descriptive statistics of the responding firms The

description focuses on age of the firm employment size firm revenues and

firm ownership

TABLE 7 COMPANY AGE PROFILE

Age of Company Frequency Percentage

1- 3 years 44 314

4- 6 years 68 486

7-10 years 19 136

11-15 years 7 50

Above 15 years 2 14

TOTAL 140 100

Table 7 displays the statistical data Of the firms responding the largest

proportion (486) was 4 to 6 years old Overall the sample reveals a skewed

distribution towards the ranges between 4 and 15 Also it is interesting to note

that 915 of the responding firms are mature that is beyond the start-up

phase

TABLE 8 EMPLOYEE PROFILE AS PER PARTICIPANT

Number of Employees

50-99 101 721

100-200 39 279

TOTAL 140 100

56

Unsurprisingly the vast majority of the responding businesses had fewer than

100 employees as depicted n table 8 with the largest proportion (701) in

the 50ndash99 employee categories The study found out that most small

companies would opt to have family and relatives as employees to minimise

costs Only 32 average of the firms were medium-size The preponderance

of small firms in the sample mirrors a more general pattern of firm distribution

in the country where medium and large firms are a conspicuous small

minority

TABLE 9 ANNUAL SALES AS PER COMPANY

Annual Sales

Less than R100 000 88 629

R101 000- R250 000 36 257

R251 000- R15 million 11 79

Above 15 million 5 35

Total 140 1000

As shown in table 9 the largest proportion of responding firms 88or 629

achieved a turnover below R10000000Only scant 11 or 79 posted annual

revenue in excess of R15 million

57

TABLE 10 OWNERSHIP AS PER PARTICIPANT

Ownership

Wholly Citizen 76 550

Joint Venture 42 293

Foreign Owned 22 157

TOTAL 140 100

Regarding ownership table 10 shows that an overwhelming majority or 550

of firms were wholly citizen-owned while the remaining 293and 157

were joint venture with citizen stake and foreign-owned respectively

44 Language

From most of the participants investors do not have to learn Local Mauritius

language since English and French are the official languages in the country

Since most of the investors to Mauritius are either English or French speaking

language as such is not a barrier to business practices and success for

prospective investors

ldquohellipwell it is not very important for foreign investors to learn languages

spoken in Mauritius because we can speak both English and Frenchrdquo

[Participant A5]

ldquohellipactually language is not barrier to English or French speaking investorsrdquo

[Participant A21]

58

Language is perhaps the most complex and perplexing aspect of the

Mauritian social mosaic (Rassool 1996) Contrary to the results that show that

language is not a problem for investors since most of the investors who come

to Mauritius are English or French speakers who normally fits well in the

society since these are the two official languages

This intricacy derives from the number of languages spoken combined with

the uses to which they are put and the socio-political connotations they bear

Baker and Stein (1977) scholars studying language use in Mauritius have

found that English is associated with knowledge French with culture

Creole with egalitarianism and other languages ancestral heritage

Consequently although Creole is the most widely spoken language in the

country French predominates in the media and English is the official

language of government and school instruction (Stein and Baker 1977)

According to the 1983 census the top five languages were Creole 541

Bhojpuri 204 Hindi 115 percen French 37 and Tamil 37 These

figures indicate the principal language used in the home Most Mauritians

however speak several languages

Literature suggests that global organizational structures need to adopt

common rules and procedures in order to have a common bdquolanguage‟ for

communicating across cultural borders (Kostova 1999 Kostova and Roth

2003 Gupta and Govindarajan 2000) This is directly reflected by the results

above that foreign investors need not to learn the local language of locals but

its important to create a common language within the organisation that is

59

understood by all stakeholders in the organisation for effective and efficient

communication

45 Religion

The study found that main religions in Mauritius are Hindu Muslim and

Christianity to a lesser extent Hindus make up approximately half of

religiously affiliated Mauritians Of the remaining Mauritians approximately a

third are Christians and about 15 Muslim followed by small Buddhist and

Sikh communities It is therefore imperative that a foreign investor considers

religion of the people of Mauritius before setting up a business Religion

The study also found out that various religions found on Mauritius tend to play

a major part in the islands cultural events and churches temples and

mosques are to be found everywhere Hindu and Tamil celebrations are part

of Mauritian cultural life

ldquohellipFestivals such as Divali (the festival of lights) Holi (in which participants

are covered in colourful powders) and Thai Poosam in which Tamil devotees

pierce their bodies with masses of needles as an act of penance are

popularly attended by Mauritianshelliprdquo [Participant A60]

ldquohelliphellipthere are also a number of diverse practices and superstitions

originating in beliefs brought from Africa and Asia Local sorcerers known as

longanistes or traiteurs are sometimes called in to settle arguments exact

revenge or administer love potionshelliphelliprdquo [Participant B41]

60

However all communities live together in harmony with each other regardless

of religion the study learnt

hellipHarmonious separatism is how we characterise our communal relations

in Mauritiushellip [Participant A13]

Since all citizens are ldquodescendants of slavery there are no tribes unlike

other African countries This has made integration and assimilation easier and

it makes it very easy for any SME to adapt to the local conditions due to pre

existing harmonyrdquohellip [Participant A13]

It is worth noting that businesses remain closed in public religious days but

the purchasing power remains the same regardless of whether it‟s a public

holiday or not

ldquohellipthe demand is not dependent on whether itrsquos a holiday or nothelliprdquo

[Participant A11]

ldquohellipit doesnrsquot matter really whether its holiday or religious holidayhelliprdquo

[Participant A21]

According to Stein and Baker (1977) the Mauritian society is noteworthy for

its high degree of religious tolerance Mauritians often share in the

observances of religious groups other than their own In part as a result of the

multiplicity of religions Mauritius has more than twenty national holidays In

addition the government grants subsidies to all major religious groups

61

according to their membership (Stein and Baker 1977)This is also evident

from the results of the research

Ethnicity religion and language have been important factors in shaping the

way Mauritians relate to each other in the political and social spheres Despite

the fact that sectarian factors are less of a determining factor in peoples

social and political behaviour they remain an important clue to the peoples

past and self-identity (Rassool 2001) As a foreign investor understanding

the religious belies of a society and taking all the necessary details in to

consideration play a major role in an international business environment

setting (Hosftede 1980) For example observing religious holiday and making

sure employees get days off and annual leaves on such important days

having prayer rooms for those willing to pray at work and creating a non-

discriminatory environment for all employees

It is worth mentioning that while religion does not have a direct impact on

Mauritius investment since it an international business hub However it is

important for investors to take note of all the aspects of religion since it plays a

very important role in lives of the Mauritians For example there are religious

holidays as an employer it is important to follow the religious holiday calendar

and give annual leaves to employees on such important days

46 Social Life

For the interest of prospective investors the study found that the social life in

Mauritius is very much close to families and friends People all meet at open

markets for normal shopping and socialise over weekends ldquoeven ministers

62

managing directors of big companies go to open marketsrdquo [Participant

A12]

There is no busy night life in the country as well as cinema and theatres

because most people prefer home video entertainment ldquoMost people found at

social places like cinemas pubs clubs etc are employees and not

employersrdquohelliphellip [Participant A12] Prospective investors should therefore

know that they are likely to meet business associates at board rooms or at

their offices rather than at social centres

In a society where tolerance is a national virtue and ethnic conflicts are

invisible to the casual visitor it takes time to learn the dos and donts of

socialising ldquohelliphere in Mauritius you must realize that we walk on eggs

continuouslyhelliprdquo [Participant B36] For a peaceful and tolerant as Mauritius

undoubtedly is the diverse groups populating the island do not collectively

make up a nation Mauritius like any other island is a nation of nations and

compromise is the order of the day be it in politics in the economy in the

media or at a dinner party the study found

The study found out that unlike other African societies Mauritius people would

prefer to stay at home and watch movies play video games with kids or visit

friends and relatives to socialise or for a night out There are not many social

night clubs in Mauritius as compared to the United Kingdom ldquohellipmany homes

today have a Digital Video Decoders (DVD) sets and donrsquot see the importance

of going out to cinemas and would helliphelliphelliprdquo [Participant A12]

63

This does not come as a surprise since literature suggests that Mauritius

though it is multicultural society and an international hub for business there

are a quiet peaceful and tolerant nation and would prefer to keep their space

(Stein and Baker 1977)

47 Market Accessibility

The study found that as first foreign investor Mauritius government has open

market programme When the free operational zone initiative began investors

imported raw materials imported duty free and foreign companies had to

show transformation of raw materials into fished exports since the

government‟s aim was to increase exports thus improve balance of trade

However in the early stages the initiative did not work as expected because

of certain barriers

Lack of adequate government incentives to lure more investors

Too much repetition meaning most of the companies where doing the

same thing

Lack of skilled human resources

The scenario is summarised by participant B3 in the following

statementldquohelliphellipour people did not have culture of businessrdquo

For more access to the markets further initiatives were put into place The

government assured investors of freedom of capital movement that is the

investors were guaranteed that they would bring their money into and out of

the country whenever they felt like doing so In addition the government

64

embarked on providing more facilities (industrial buildings) and infrastructures

all over the country opening up rural areas because towns already had

infrastructures Lastly first time investors were provided with free access to

customs thus maintaining the earlier option of tax free imports

While Mauritius was doing all these events elsewhere in the world played to

their favour European Union and USA were imposing import quotas on

Chinese and Indian imports to prevent damping So these investors had to

look for alternative markets and Mauritius turned out to be one of such

markets But the government had to act quickly to avoid bdquotransit investors‟

ldquohellipthey are investors who want to do business when it favours them but when

they begin to loose certain privileges or profits get diminished then they take

offrdquohelliphellip [Participant B3]

To avoid this foreign investors were made to transfer skills and knowledge to

local community which led to emergence of Mauritius community of

manufacturing

ldquowho started from easy stitching like socks pyjamas bras etc and later

upgraded to big Mauritius labelshelliprdquo [Participant B3]

The study further found that the initiative did not stop there The government

further established Mauritius Enterprise Development Investment Authority

(MEDIA) in 1985 which took lead in looking for prospective investors from

65

Europe USA Hong Kong and India among others Any willing investor was

transported to Mauritius and accommodated freely on government accounts to

tour the country and carry out investment feasibility studies This helped to

popularise the investment opportunities in Mauritius and attracted many more

investors Currently MEDIA has been transformed into Mauritius Board of

Investment which is no longer in charge of managing industries but

ldquopromotes Mauritius businesses abroad and participates in trade fairs to

further open uprdquo [participant B3]

The study also found out that there are specific niche markets for foreign

investment in Mauritius namely the Offshore Industry the Financial Industry

the Construction and Tourism especially in the area of high class luxury

property market in form of villas hotels and apartments and of recent the

Information Technology (IT) industry These industries cover a large spectrum

including SMEs

ldquohellipone of these sectors makes a very good investment for any investor

especially the construction industryhelliprdquo [Participant A89]

The results agree with Putz (2000) which notes that niche markets make

establishing a business by immigrants easier because the immigrants needs

for consumer goods create a specific demand This is evidence by all the

incentive the Mauritian government have put in order to attract foreign

investors in to country for the benefit of the Mauritian population Furthermore

Putz (2000) emphasise the opportunities offered by the host country including

66

access to the market and job market conditions as important factors for

international business

48 The role of ICT to SME business in Mauritius

The study found that Mauritius has a very well established ICT sector It has

formed the backbone of SME success in Mauritius As early as 1990 the

country provided hellip ldquothe fastest broadband in the world to help SME business

investors who were each allocated free 2MB internet accessrdquohellip[Participant

A 23] Recently the government has in turn invested a lot of money in

developing a cyber city a few kilometres away from the capital Port Louis

which will form the hub for future investments

This high level of ICT development in the country has created SME in areas

such as offshore financial services calls centres and enhanced tourism

industry growth Any prospective investors are guaranteed of highly

developed ICT backed up by highly qualified local human resources The

offshore investment sector has even been further boosted byhellipldquobilateral

agreements with India allowing companies registered in Mauritius to transfer

funds to India tax freerdquohellip[participant B13]

It is hoped that in helliprdquo5 years time the whole island will have free wifi

connectivityrdquo participant B33 The country not only makes use of its advanced

ICT sector but has become a big player in the region as well For example

Mauritius state informatics computerised South African government in 1996 It

has also won other computerisation contracts in Zambia Zimbabwe Namibia

Kenya and Ghana To sustain such success ldquopartnerships have been formed

67

with global players such as Microsoft to provide training not just to Mauritius

nationals but other scholars from the South Eastern Africa region as

wellrdquohellip[participant B13]As matter of fact the government of Mauritius has

invested billions in building s cyber-city a few miles aware from the capital

Port Louis

ldquoits opening in July this year and it is expected to be the centre of attraction

for investorsrdquo [Participant B13]

ldquoactually the government invested in this cyber-city with the intention to

attract European and American investorsrdquo [Participant A6]

From these results there is evidence that technology plays a major role in

SME development Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

68

48 Governance and the role of women in SME sector

in Mauritius

Mauritius is a multicultural country with ldquo70 of the population of Chinese

Indian ancestry 2 white French origin and the remaining mixed race ndash

creolesrdquo [participant A17] Europe has not have a lot if cultural influence on the

country and predominant cultures are Asian African cultures Study found

that common folklore popular songs in Mauritius would also be ordinary

found on other African countries such as Senegal Mozambique Cameroon

and Sierra Leone among others signifying deep rooted African traditions

The government maintains ndash discrimination laws for either gender In the early

stages of SME development women provided the bulk of the labour in the

rural areas as industries moved away from cities into the rural areas There

are concerted efforts to get women into jobs especially leadership roles

ldquowomen themselves are too slow to act and take advantage of the

government incentivesrdquo

The study found out that woman in Mauritius do not occupy positions of

strategic power decision making This is not a surprise because it is the same

with most Southern African countries The government of Mauritius has put a

lot of structures to support women in business but women are taking it slow to

utilize these structures

69

There are many government agencies and organizations headed by women

and even cabinet posts but most women would rather stay out of politics

becausehelliphellipldquopolitics can get very dirty involving personal lives of politicians

which men donrsquot mind but women do mind a lot aboutrdquohellip[participant A 17)

However in other sectors like education and healthcare there are many

women represented in the labour force

The study also found out that just like any other society one can not ldquohellipstop

some kind of abuse for both males and females There are cases of both

female and male harassment but the law comes in to protect such victims

There are also cases of petty crime and rape involving women either as

perpetrators or victimsrdquohellip [Participant A13]

According to AllAfrica Global Media (2008) the winds of change are blowing

across the island of Mauritius and many men in this traditionally conservative

nation are working hand in hand with women to see that the common sense of

gender equality prevails The absence of women at the decision-making table

usually means the absence of their priorities and needs Irrespective of the

Southern African Develoment Community (SADC) Declaration there are so

few women in politics This is evident from the results of the study which found

that women will rather do health jobs and education than to play the dirty

tricks of politics

Women councillors make up a mere 37 in the Moka-Flacq District Council

This is the lowest figure not only in Mauritius but also in the SADC region

70

This is far from the 2005 30 target not to mention the 50 goal now being

set for the region and included the draft Protocol on Gender and Development

up for review at the August SADC Heads of State Summit ( AllAfrica Global

Media 2008)The results found out that there is also a few representations of

women in business Women do mostly the dirty jobs of caring for children and

their families and do not have the courage to enter the business sector This is

not surprising especially in the SADC region women play the minority role

and are rarely represented at the strategic decision making level hence their

needs are always neglected resulting in women poverty

49 Challenges faced by the country and hence SME investors

Stiff competition from other countries such ashelliphellipldquoBotswana Vietnam and

South East Asia in the textile industry due to cheap labour Maldives and the

Caribbean Islands for tourism difficult in Training enough qualified personnel

in ICT to cope with demand International competition and access to fundsrdquo

hellip[participant B13]

To face these challenges the study found that the country has expanded

tertiary education and formed partnerships with foreign universities such as

ldquoFrench Scientific University which has been running Medical school in

Mauritius for 10 years By the time of this study an agreement had been

reached by Thames valley university (UK) to open up campus in

Mauritiusrdquohellip[participant B15] The aim of the government is to offer high

quality education to students from the region as well as far away like China at

affordable cost and to compete with European universities Further to

71

educational development the study also found out that the country is striving

to create partnerships with ldquoresearch organisations and to create high quality

healthcare so as to benefit from health tourism where would just travel to the

country to get affordable high quality specialised health carerdquohelliphellip [Participant

A3]

Finally results show that there is stiff competition from different sectors of

business and other force which needs to be taken into consideration when

doing business internationally Globalization tends to redistribute economic

rewards in a non-uniform manner a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) It essential to know all

the factors surrounding the business sector and understanding all the

business practices before investing to avoid any loss

72

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

Research on culture and IB is definitely a bdquogrowth‟ area because the business

world is in many ways becoming one The researcher concluded the following

based on study findings

Firstly the cultural diversity and harmony of the island make Mauritius a

unique place in the world It is also known for its social peace political stability

and racial harmony Its steady economic growth over the years coupled with

its nation‟s social cohesion and prosperity ensure continuing development

Secondly Mauritius enjoys a literacy rate over 80 percent Skilled labour

graduates and qualified professional including lawyers engineers IT

programmers consultants accountants and chartered secretaries are

available to suit virtually all business needs in two international languages

English and French Language is therefore not a barrier to foreign investment

In addition academic training at the University of Mauritius and the newly

established University of Technology a comprehensive system of vocational

training through the Industrial and Vocational Training Board (IVTB) ensures a

ready supply of skills in a number of fields such as tourism engineering

electronics jewellery ICT printing and textiles

Thirdly In view of the importance of foreign investment as a source of

sustenance to economic growth the government of Mauritius has taken a

series of policy measures to encourage its flows into manufacturing offshore

73

banking and financial services information technology communication and

tourism As far as foreign investors are concerned Mauritius offers itself as an

attractive destination because several positive features such as political

stability availability of skilled labour and investment-friendly rules and

institutions

Fourthly after a sustained growth path over the last three decades based on

sugar textiles and tourism Mauritius is now shifting gears to move towards a

higher stage of economic development so as to consolidate its position as a

premier international hub Foreign Direct Investment (FDI) has played an

important role in the development of Mauritius and will again be decisive when

the country embarks on high value-added capital intensive and knowledge-

based activities

Fifthly the government plays the role of a facilitator and has endeavoured at

all times to create the most conducive investment environment by enacting

appropriate legislations building state-of-the-art infrastructure investing in

human capital and introducing packages of investment incentives for the

manufacturing financial services and ICT sectors so as to enhance the image

of Mauritius

In this respect the Board of Investment (BOI) is the first contact point for

anyone investing in Mauritius Operating under the aegis of the Ministry of

Finance the BOI was established in March 2001 under the Investment

74

Promotion Act to give a new impetus to foreign direct investment The BOI is

the apex organization for the promotion and facilitation of investment in

Mauritius The primary role of BOI is to stimulate the development expansion

and growth of the economy by promoting Mauritius as a competing business

and service centre It aims at streamlining the legal framework and to make

better provision for the promotion and facilitation of investments in Mauritius It

acts as a facilitator and provides a one-stop shop service to both local and

foreign investors ensuring reliable and speedy processing of applications The

BOI receives processes and approves all applications for investing in

Mauritius It also assists investors in obtaining the necessary secondary

permits and clearances from relevant authorities thus ensuring a speedy

implementation project

Six Mauritius pursues a liberal investment policy and actively encourages

foreign direct investment in all sectors of the economy Attractive packages of

both fiscal and non-fiscal incentives tailor-made to the needs of each priority

area of development are offered to investors Excellent opportunities for

investment in Mauritius exist in various sectors of the economy including

manufacturing information technology knowledge industry regional

headquarters tourism and leisure financial services Freeport activities

amongst other sectors Some of the priority areas are in Information and

Communication Technology which is set to a play a lead role in the economic

development of the country in the medium and long terms The availability of

high bandwidth connectivity (with SAFE Project and international Gateways)

at near global parity in quality and tariff on the one hand and the setting up of

75

dedicated IT habitats including the Cyber city at Ebeacutene on the other hand

plus total Government support to this industry are testimony of the importance

of this industry to Mauritius Others include the manufacturing sector textiles

and apparel the spinning sector electronics and light engineering medicals

and pharmaceuticals agro-business leather products and jewellery and

watches

The export-oriented manufacturing sector has been the backbone of the

Mauritian economy for the past three decades This sector remains a major

constituent of the Mauritian economy in terms of foreign exchange earnings

employment and contribution to GDP and is called upon to continue to play

an important role in the consolidation and diversification of the industrial base

of the country certain

Lastly some incentives provided by government to foreign investors In the

manufacturing sector these include among others

No customs or duty or sales tax on raw materials and equipment

No tax on dividends

No capital gains tax

Free repatriation of profits dividends and capital

50 relief on personal income tax for expatriate staff

New incentives for the ICT Sector consist inter alia of

the availability of tax holiday up to year 2008 for specified

pioneering high-skills ICT operators typically geared towards the

export market such as software development multi-media and to

high-level ICT training institutions

76

customs duty-free import of ICT and similar equipment

50 relief of personal income tax for a specified number of foreign IT

staff

duty-free import of personal belongings of foreign IT staff

effective fast track procedure for procession of visa and work

permits for foreign staff including spouses

From the above the research concludes that Mauritius being a multicultural

society as it is the culture they share does not have a direct impact on

investment in Mauritius because of it is an international hub for business It is

also expected that from the results the situation is not going to change after

time but will keep in this shape for a long since it is the government incentive

to attract more investors into the country However there are certain aspect of

culture eg believes that foreign investors need to understand and take into

consideration This study recommends any prospective investor to make good

investment in to Mauritius without fear

77

CHAPTER SIX

REFLECTIONS FROM THE STUDY

The views derived from this study might not be directly applicable to the whole

region because of variations in socioeconomic settings in various parts of the

Mauritius Also views expressed in this study were obtained mainly from

urban based managers and respondents and might not be similar to rural

based SMEs from the same community or area

Some scholars might not support the sampling techniques used but they

were the most practicable given the circumstances

Legal practitioners in Mauritius were supposed to be part of the sample but

they were hard to reach with some declining to participate

Demographically and geographically the sites were larger than anticipated

given the time and resources available for the study

Lastly the study was limited to the previous 20 years which might have

yielded same generational trend missing the opportunity to get data across

various generations within the sites

78

CHAPTER SEVEN

FUTURE RESEARCH

With more funding and resources a similar study could be conducted

throughout a wider geographic region and encompassing all categories of

SMEs micro small and medium Furthermore with more time a greater

number of interviews could be conducted which would provide richer data that

would be more in depth for conclusive analyses to be made Additionally

participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

79

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

WORD COUNT 16 969

80

APPENDICES APPENDIX 1 MauritiusData Profile

2000 2005 2006

World view

Population total (millions) 119 124 125

Population growth (annual ) 10 08 08

Surface area (sq km) (thousands) 20 20 20

Poverty headcount ratio at national poverty line ( of population)

GNI Atlas method (current US$) (billions) 444 653 681

GNI per capita Atlas method (current US$) 3740 5250 5430

GNI PPP (current international $) (billions) 891 1239 1334

GNI per capita PPP (current international $) 7510 9970 10640

People

Income share held by lowest 20

Life expectancy at birth total (years) 72 73 73

Fertility rate total (births per woman) 20 20 20

Adolescent fertility rate (births per 1000 women ages 15-19) 39 40 41

Contraceptive prevalence ( of women ages 15-49)

Births attended by skilled health staff ( of total) 100 99

Mortality rate under-5 (per 1000) 18 15 14

Malnutrition prevalence weight for age ( of children under 5)

Immunization measles ( of children ages 12-23 months) 84 98 99

Primary completion rate total ( of relevant age group) 105 97 92

Ratio of girls to boys in primary and secondary education () 98 100 103

Prevalence of HIV total ( of population ages 15-49) 06

Environment

Forest area (sq km) (thousands) 04 04

Agricultural land ( of land area) 557 557

Annual freshwater withdrawals total ( of internal resources)

Improved water source ( of population with access) 100

Improved sanitation facilities urban ( of urban population with access) 95

Energy use (kg of oil equivalent per capita)

CO2 emissions (metric tons per capita) 23

Electric power consumption (kWh per capita)

Economy

GDP (current US$) (billions) 447 629 635

GDP growth (annual ) 40 46 35

Inflation GDP deflator (annual ) 37 48 41

Agriculture value added ( of GDP) 6 6 6

Industry value added ( of GDP) 31 28 27

Services etc value added ( of GDP) 63 66 68

Exports of goods and services ( of GDP) 63 57 60

Imports of goods and services ( of GDP) 65 61 67

Gross capital formation ( of GDP) 26 23 25

Revenue excluding grants ( of GDP) 220 214 215

Cash surplusdeficit ( of GDP) -11 -21 -30

States and markets

Time required to start a business (days) 46 46

Market capitalization of listed companies ( of GDP) 298 416 567

Military expenditure ( of GDP) 02 02

Fixed line and mobile phone subscribers (per 100 people) 39 82 90

Internet users (per 100 people) 73 241 145

Roads paved ( of total roads) 97

High-technology exports ( of manufactured exports) 1 2 24

Global links

Merchandise trade ( of GDP) 82 84 91

Net barter terms of trade (2000 = 100) 100 109 115

External debt total (DOD current US$) (millions) 1713 2153 1997

Short-term debt outstanding (DOD current US$) (millions) 767 1363 1363

Total debt service ( of exports of goods services and income) 181 72 71

Foreign direct investment net inflows (BoP current US$) (millions) 266 39 107

Workers remittances and compensation of employees received (US$) (millions)

177 215 215

Official development assistance and official aid (current US$) (millions) 20 34 19

Source World Development Indicators database April 2008

81

APPENDIX 2

SUMMARY GENDER PROFILE (Mauritius)

Mauritius

Sub-Saharan Africa

Upper middle income

1980 1990 2000 2004 1980 2004 1980 2004

GNP per capita (US$) 1210 2300 3690 4640 652 601 2391 4769

Population

Total (millions) 10 11 12 12 3850 7258 4394 5762

Female ( of total) 507 501 502 503 503 501 515 514

Life expectancy at birth (years)

Male 63 66 68 69 47 46 63 66

Female 69 73 75 76 50 47 71 73

Adult literacy rate ( of people aged 15+)

Male 848 884 954

Female 750 805 942

LABOR FORCE PARTICIPATION

Total labor force (millions) 0 0 1 1 157 299 193 256

Labor force female ( of total labor force)

37 34 34 35 43 42 42 41

Unemployment

Total ( of total labor force)

33 88 102 12

Female ( of female labor force)

36 96 126 134

EDUCATION ACCESS AND ATTAINMENT

Net primary school enrollment rate

Male 91 96 94 68

Female 92 97 96 60

Progression to grade 5 ( of cohort)

Male 97 99

Female 98 99

Primary completion rates ( of relevant age group)

Male 61 105 98 66 95

Female 63 104 102 56 96

Youth literacy Rate ( of people aged 15-24)

Male 912 937 978

Female 911 954 974

HEALTH

Total fertility rate (births per woman)

27 23 20 20 67 53 31 20

Contraceptive prevalence ( of women aged 15-49)

75 26 76 22 69

95

82

APPENDIX 3

DATA COLLECTION FORM FOR THE SURVEY Sitehelliphelliphelliphelliphellip Participant numberhelliphelliphelliphellip MANAGING DIRECTOR CEO MANAGER

Age group -25 26 ndash 35 36 - 45 46-55 56-64 65+

Education Nursery ndash Standard 4

Std 5 ndash 7 (8) Form 1 ndash 2

Form 3 ndash 4 or A level

College University

Employment Yes No Business (what type)

Partnership Whole Citizen

Joint Venture

Age of Company

1-3 years 4-6 years 7-10 years

11-15 Above 15yrs

Number of Employees

10-25 50-99 100-149 150-200

Place of birth

In the constituency

Outside the constituency

Where

Residence Rural Urban Where

Before starting business

After business

Children

Boys Number

Girls Number

Any born a Yes None

Are they in school

Yes No Some

Working Yes No Some

Annual Sales

Balance Sheet

Less than R1000000

R101 000- 250 000

R251 000- 15 million

R 15 million +

Years Employed as CEO

0-3 4-7 8-14 15-19 Over 20 years

83

APPENDIX 4 Qualitative data questionnaire The following questions were used as a guide during the focus group discussions However they were not followed in the strict order or wording as they appear here

SOCIAL INCLUSION EXCLUSION

I am going to ask you questions regarding support you think the society could give foreign investors There is no right or wrong answers it is just about your opinion

a) How do you feel about foreign investors coming to Mauritius

b) How has your friendship with foreign business before and after they arrive in Mauritius

c) Do you keep in touch with foreign businesses around you and prospective investors

d) In your opinion how does foreign business feel about Mauritius

e) Are foreign businesses doing well or badly

f) What support structures or government incentives are there for foreign investors

g) What kind of support would you like to receive from the government

BUSINESS ATTITUDE AND BELIEFS

I am now going to ask you some general questions about business and your opinions about it

a) How would you describe the general business environment

b) Do you find it difficult to do business with people from different countries of the world Why

c) What do you believe the first thing to do on the morning before opening

your business (Local people) Why

d) How best can the Mauritius people be motivated into business How do you get over them

84

e) What areas do local people consider as niche areas for foreign

business

f) How do local people organize their business Why

g) As a local business person what would you consider as abomination of business in Mauritius Why

h) What is the role of women in the business sector

CULTURE

I am now going to ask you questions about the your culture

a) What are your views about business culture in Port Louis

b) What are the challenges of national culture on business practices in your opinion

c) What are the benefits of culture on business practice

d) Do you think foreign investors need to know the local language when investing in Mauritius

e) If you were to advice a foreign investor what would you want them to know about Mauritius

f) How do you think the family daily practice influences business in

Mauritius

g) What business actions of behaviors are sensitive to the local people

h) How best can foreign investors assimilate with the local business people

i) What do local people like to buy on weekends week days public religious holidays

j) What marketing strategies violet the culture of Mauritius ndashwomen naked Eating behavior Etc

85

APPENDIX 5

Introductory letter consent form

TITLE CULTURE AND INTERNATIONAL BUSINESS

ENTREPRENUERSHIP A CASE STUDY OF MAURITIUS

INTRODUCTION

I am Angelinah Boniface a student pursuing Masters of Science in

Information Systems the University of Sheffield United Kingdom I am

conducting a study on the Impact of culture on small and medium

enterprises for my dissertation The study is expected to last 3 months and a

report of the findings will be availed to all interested stakeholders including the

university as part of course requirements

PURPOSE OF THE STUDY

This study is intended to gain insight into views and opinions about

widowhood and inheritance in relation to health and well being of participants

and the community at large Evidence from this study may be useful in future

government and development agencies‟ planning and provision of relevant

interventions for the benefit of the whole community

VOLUNTARINESS AND CONFIDENTIALITY

Your participation in this study is purely voluntary and you can withdraw

at any time should you feel uncomfortable to proceed Information obtained

from this study will be used for no any other purpose other than the

dissertation It will be kept confidential only accessible to the researcher and

pseudonyms will be used to ensure anonymity and confidentiality of

participants and location The researcher will strive to treat all participants

with dignity respect equality and minimise possible harm that might arise

from the study

Agreeing to take part in this study will be treated as your consent to be

involved in this research BUT YOU HAVE THE RIGHT TO WITHDRAW

THE CONSENT

86

RISKS AND BENEFITS

There are no risks to the questions that will be asked If at any point you feel

uncomfortable to answer any question please feel free to ignore such to avoid

any harm

There is likely to be no immediate benefits to you as a participant However

the information obtained in this study will go a long way in informing the

younger generation and wider audience about the culture It might also be

used by the government and other development agencies to plan for

interventions relevant to the needs of widows in your community in the future

based on the evidence you have provided in this study

CONTACTS

The researcher can be contacted at +44 0791263163 lip07acbshefacuk

or linabonyahoocom in case of any questions issues

In case of any problems that need university attention my supervisor can be

contacted at kalbrightshefacuk

PLEASE DONrsquoT TAKE PART IN THIS STUDY IF YOU ARE BELOW 18

YEARS OF AGE

Thank you very much for your anticipated cooperation

Researcher‟s signature Participant‟s signature

helliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

87

REFERENCES

Bhagat RSet al (2002) Cultural variations in the cross-border transfer of

organizational knowledge an integrative framework Academy of

Management Review 27(2) 204ndash221

Boyacigiller NA amp Adler NJ (1991) ldquoThe parochial dinosaur organizational

science in a global contextrdquo Academy of Management Review 16(2) 262ndash

290

Bowling A (ed) (2002) Research methods in health Investigating health and

health services Buckingham Open University press

Dabee R and Greenway D (2001)The Mauritian Economy A Reader

PalgraveNew York

Dawson C D (2002) Practical research methods A user friendly guide to

mastering research techniques and projects Oxford How to Books Ltd

Denscombe M (ed) (2007) The good research guide for small scale social

research projects Berkshire Open University Press

Denscombe M(ed) (2003) The good research guide For small scale social

research projects Maidenhead Open University Press

Economic And Social Research Council (2005) ESRC research ethics

framework [online]

httpwwwesrcsocietytodayacukESRCInfoCentreopportunitiesresearch5

Fethics5Fframework [ Accessed May 05 2008]

88

Gilbert N (ed) (2001) Researching social life London Sage Publishers

Grbich C (1999) Qualitative research in health An introduction London

Sage publications

Hunter D amp Lang T (1993) The Leeds declaration Leeds Nuffield Institute

for Health

Neuman L W(ed) (2000) Social research methods qualitative and

quantitative approaches Needham Heights MA Allyn amp Bacon

Maynard M amp Purvis J (1994) Researching womens lives from a feminist

perspective London Taylor and Francis group

Muuka GN (2002) Africas informal sector matters a challenge to scholars

to close the knowledge gap Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

Business and Development International Conference Port Elizabeth April 3-

6 pp1-6

Southwood R (2004)The impact of ICT on SMEs ndash a motor for future

economic growth in hard-pressed times [Online] Balancing Act news update

wwwbalancingact-africacomnewscurrent1html [Accessed 26 January

2008]

Machacha L (2002) Impact of information technology on small and medium

enterprises (SMEs) in Botswana Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

89

Business and Development International Conference Port Elizabeth April 3-

6 pp277-82

Organisation for Economic Co-operation and Development (OECD)

(2000)OECD study highlights role of small and medium enterprises in job

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Commonwealth Secretariat UK (2006) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius London Commonwealth

Secretariat

Reed DM (1998) Using the Business Excellence Model in Small Service

Business British Quality Foundation

Taylor AW amp Adair RG (1994) ldquoEvolution of Quality awards and self

assessment practices in Europe a case for considering organisation sizerdquo

Total quality Management 5 (4) 227-237

United Nations (1993) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

Johanson J amp Wiedersheim-Paul F (1995) The Internationalization of the

Firm - Four Swedish Cases Journal of Management Studies 20 (3) 123-139

90

Chui ACW Lloyd AE and Kwok CCY (2002) The determination of

capital structure is national culture a missing piece to the puzzlerdquo Journal of

International Business Studies 33(1) 99ndash127

Earley PC amp Gibson CB (2002) Multinational Teams A New Perspective

Lawrence Earlbaum and Associates Mahwah NJ

Gibson CB (1999) ldquoDo they do what they believe they can Group-efficacy

beliefs and group performance across tasks and culturesrdquo Academy of

Management Journal 42(2) 138ndash152

Hofstede G (1980) Cultures Consequences International Differences in

Work-Related Values Sage Newbury Park CA

SMIDO (2006)A new Vision For SMEs Development Mauritius

Government Printer Port Louis

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Stone A (1997) SMEs and Technology why should we make special efforts

to help World Bank

Bhagat RS et al (2003) Knowledge in Cross-Cultural Management in Era

of Globalization Where Do we Go from Here in D Tjosvold and K Leung

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(eds) Cross-Cultural Management Foundations and Future Ashgate Englan

155ndash176

Cairncross F (2001) The Death of Distance Harvard Business School Press

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Commonwealth Secretariat UK (2005) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius Commonwealth Secretariat

Drucker PF (1995) Managing in a Time of Great Change Truman Talley

BooksDutton New York

Guilleacuten M (2001) ldquoIs globalization civilizing destructive or feeble A critique

of five key debates in the social science literaturerdquo Annual Review of

Sociology 27 235ndash260

Gibson CB and Cohen SG (2003) Virtual Teams that Work Creating

Conditions for Virtual Team Effectiveness Jossey-Bass San Francisco

Grazol P et al(2004) ldquoThe Effect of Culture on IT Diffusion Email and Fax in

Japan and the US Information Systems Researchrdquo Journal of International

Consumer Marketing 16 4 pp 29-64

Greider W (1997) One World Ready or Not Crown Business New York

92

Gertler MS (1997) The Invention of Regional Culture In Lee R and Willis J

eds Geographies of Economies London Arnold

Govindarajan V and Gupta AK (2001) The Quest for Global Dominance

Transforming Global Presence into Global Competitive Advantage Jossey-

Bass San Francisco

Haire M et al(1966)Managerial Thinking An International Study Wiley

New York

Heuer M et al(1999) Cultural stability or change among managers in

Indonesia Journal of International Business Studies 30(3) 599ndash610

Hofstede G (1997) Cultures and Organizations Software of the Mind New

York McGraw-Hill

Hofstede GH (2001) Cultures Consequences Comparing Values

Behaviors Institutions and Organizations Across Nations London Sage

Publications

Hoecklin L (1995)Embedded Autonomy States and Industrial

Transformation Princeton NJ Princeton University Press

93

IBP USA (2002) Mauritius Investment and Business Guide IB Tauris and Co

LTD London

Kerr C et al (1960) Industrialism and Industrial Man Harvard University

Press Cambridge MA

Kirkman BL amp Shapiro DL (2000) ldquoUnderstanding why team members

won‟t share an examination of factors related to employee receptivity to team-

based rewardsrdquo Small Group Research 31(2) 175ndash209

Lisenda L (2003) Small and medium-scale enterprises in Botswana their

characteristics sources of finance and problems BIDPA Gaborone

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Meredith GG (ed) (2004) Small Business Management in Australia

McGraw-Hill Sydney

Mistry PS (1999) ldquoCommentary Mauritius ndash quo vadisrdquo African Affairs 98

(393) 551ndash69

Mullins LJ(ed) (1999) Management and Organizational Behavior 5th ed

London Financial Times Pitman

94

Myers MDamp Tan FB (2002) ldquoBeyond Models of National Culture in

Information Systems Researchrdquo Journal of Global Information Management

10 (1) 112-134

Putz R (2000) ldquoCulture and entrepreneurship views from the middle and

lower level managersrdquo Journal of Business Ethics 22 145- 153

Scottish Economic Statistics Scottish ExecutiveONS IDBR (2005)Size

Analysis of Welsh Business SDR 692004Statistical Press Release URN

0440

Straub D et al (2002) rdquoTowards A Theory-Based Measurement of Culture

Journal of Global Information managementrdquo 10 (1)

Schaeffer RK (2003) Understanding Globalization The Social

Consequences of Political Economic and Environmental Change Rowman amp

Littlefield Lanham MD

SMIDOA new Vision For SMEs Development(May 1996)

SMME Task Force Report (1998) Small medium and micro-enterprises task

fore force report Government Printer Ministry of Commerce and Industry

Sondergaard M amp Hofstede G (1994) ldquoA study of Reviews Citations and

Replicationsrdquo Organization Studies 15 (3) 447-456

95

Schein EH (1992) Organizational Culture and Leadership Jossey-Bass

San Francisco

Stone A ( 1997) SMEs and Technology why should we make special efforts

to help (World Bank 1997)

Statistical Press Release (2005) URN 0592 Office for National Statistics

Weisinger JYamp Trauth EM (2002) ldquoSituating Culture in the Global

Information Sectorrdquo Information Technology amp People 15 (4) 306-320

United Nations (2005) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

1

CHAPTER ONE

INTRODUCTION

Globally Small and Medium Enterprises (SMEs) are increasingly regarded as

vital for diversifying economies through the creation of employment

(Machacha 2002 p 277) The OECD (2000) notes that small and medium-

sized enterprises account for 60-70 percent of jobs created in member

countries Southwood (2004) in discussing the status of the SME sector in

Africa observed that governments and large corporations dominated

economies of the countries yet the real engine of economic growth lay with

SMEs Muuka (2002 p 1) in discussing the SME sector in Africa noted that

the informal sector is huge due to the large numbers of employees it absorbed

as a consequence of inadequate jobs and opportunities in the formal sector

The author points out that in many African countries the informal sector is

estimated to employ from three to six times the number of employees in the

formal sector However very little has been documented through research

about this important sector

In Mauritius the Mauritian government believes that the real engine of

sustainable and equitable growth is in the SME sectors Not only is it of great

importance for the rate of job creation and income generation but also it

deserves particular attention since the sector has been largely neglected in

the past In this respect this study of Mauritius is important in addressing

some of issues of culture by using the International business as a framework

for this study to understand the business environment in Mauritius and the

potential for growth in a global perspective (Stone 1997)

2

In this new millennium few executives can afford to turn a blind eye to global

business opportunities Japanese auto-executives monitor carefully what their

European and Korean competitors are up to in getting a bigger slice of the

Chinese auto-market Executives of Hollywood movie studios need to weigh

the appeal of an expensive movie in Europe and Asia as much as in the US

before a firm commitment The globalizing wind has broadened the mindsets

of executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories

However research shows that as markets competition and organisations

globalise the business people businesses themselves and consumers

involved in these institutions increasingly have to interact manage negotiate

and compromise with people from different cultures (Hofstede 1997

Hoecklin 1995) Global business managers report that when doing business

overseas challenges mount For example structural conditions physical

social and economic arrangements can affect business operations and

outcomes as can the varied norms and behaviours that come with different

national cultures

One such new trajectory is the concern with national culture Whereas

traditional IB research has been concerned with economiclegal issues and

organizational forms and structures the importance of national culture

broadly defined as values beliefs norms and behavioral patterns of a

national group (Hofstede1980) has become increasingly important in the last

two decades largely as a result of the classic work of Hofstede (1980)

3

National culture has been shown to impact on major business activities from

capital structure (Chui et al 2002) to group performance (Gibson 1999) For

reviews see Boyacigiller and Adler (1991) and Earley and Gibson (2002)

Weisinger and Trauth (2003) report that culture evolves and takes unique

forms in local offices of organizations This means that culture is both dynamic

and situated in its local context Thus external conditions both structural and

cultural can influence global business Yet small and medium enterprise

(SMEs) managers can have an impact on how their organizations‟ cultures

evolve Therefore strategic leaders need to introduce unique norms values

and processes that fit together coherently in successful organizations

Therefore the main purpose of this case study is to explore and understand

the Small Medium Enterprise (SMEs) business environment in Mauritius and

how SMEs can penetrate the business culture there

The purpose of this paper is therefore to explore and understand how national

culture influences international business decisions and how to culture affects

international business investment using Mauritius as a case study

In this chapter the author outlines the background of the study specifies the

study objectives describes the significance of the study gives methodological

overview and finishes off by outlining definitions of key terminologies

4

11 Background to the Study

Strategically located in the Indian Ocean at the crossroads of Africa and Asia

Mauritius is reputed for its beautiful countryside and its 150 kilometres of white

sandy beaches and transparent lagoon A British colony that gained

independence in 1968 officially known as Republic of Mauritius the country is

positioned to the east of the Madagascar Islands The geographical

coordinates of the nation are 20ordm17 South latitude and 57ordm33 East longitude

The total area covered by the island nation is 2040 square kilometres

Mauritius enjoys a maritime sub-tropical climate and is therefore an all-year-

round holiday destination From a monocrop economy depending mainly on

sugar it has diversified its economic activities into textile and apparel

industry tourism and financial service Mauritius has witnessed a massive

development in the last decades (SMIDO 2006)

5

Figure 1 Map of Mauritius showing all Provinces

Source Encarta World atlas online

6

Figure 2 Mauritius map showing political divisions of the country

Source Maps of the world online

The research area was around the capital city Port Louis marked in red For

anonymity the site was just called A or B Administratively Mauritius is divided

into nine Provinces (figure 2)

The country is remarkable in its ethnic diversity It forms a unique mosaic of

immigrants from the Indian sub-continent Africa Europe and China The

cultural diversity and harmony of the island make Mauritius a unique place in

the world The various religions found on Mauritius tend to play a major part in

7

the islands cultural events and churches temples and mosques are to be

found everywhere Hindus make up approximately half of religiously affiliated

Mauritians followed by Muslims and Christianity as the minority It is also

known for its social peace political stability and racial harmony Its steady

economic growth over the years coupled with its nation‟s social cohesion and

prosperity ensure continuing development (Country Profile 2005)

The country is equipped with a highly skilled labour force to suit virtually all

business in two international languages English and French and a very good

infrastructure thereby attracting Foreign Direct Investment The average

economic growth was 56 over the last 3 years The income per Capita has

reached 4000 US Dollars As a result the standard of living has gone up The

country has now a life expectancy rate of 714yrs an adult literacy rate of 83

(Country Profile 2005)

To face globalisation and a new economic environment the Government has

taken several steps High value-added capital intensive and knowledge-

based activities are on the priority list The Information Technology sector is

undergoing rapid changes so as to be fit for the next millennium The aim is to

make Mauritius a centre for high-tech and software services which can be

exported (Commonwealth Secretariat 2006)

8

12 An Overview of Mauritian Economy

The economy of Mauritius has experienced major structural transformation

over the last two decades The country has moved away from a mono-crop

economy with fast population growth high unemployment and low per capita

income to one that is more dynamic and diversified The sources of

diversification have been agriculture export manufacturing (mainly textile)

tourism and more recently international services with Offshore and Freeport

activities (Country profile 2005)

To respond to the global competition in these sectors Mauritius has made

extensive use of modern technology to improve its productivity and efficiency

The real growth rates have been around 54 over the past four years and

Mauritius is now classified as a middle-income country and is one of the

healthiest economies in the whole African region (Country profile 2005) The

sugar sector provided the start-up capital for the Export Processing Zones

(EPZ) The rapid rate of growth of investment in the manufacturing sector

(investment grew by over 30 each year from 1983 until the late 1990s in this

sector) that led to the success of the EPZ and the Mauritian economy as a

whole This was made possible by the confidence of entrepreneurs and

foreign investors prevailing in the country at that particular time The private

sector accounts for approximately 70 of total capital formation in Mauritius

Investment rate stood around 27 in the four years ending 1996 peaking to

30 in 1994 (SMIDO 1996)

9

When the government recommended the diversification of the economy with

the creation of Export Processing Zones in the early 1980‟s the EPZ sector

benefits from duty-free and quota free access into European Union markets

granted under the Lomeacute Convention as well as tariff preferences granted

under the General System of Preferences (GSP) by countries such as North

America and Japan The mid 1980s witnessed a textile boom raising per

capita incomes and living standards However the conclusion of the Uruguay

Round (General Agreement on Trade amp Tariffs) implies the loss of guaranteed

markets and preferential access which will result in strong competition in

these respective markets (Country profile 2005)

The new strategy of the industrial sector aims at targeting high quality and

high value added products with a view to restoring the competitiveness of the

goods by applying latest technology to the manufacturing industry and hence

improving the quality of the finished products Limited data is available

regarding the SME sector in Mauritius The current research has observed

that there is little research in the field in SME sector in Mauritius

In view of the importance of foreign investment as a source of sustenance to

economic growth the government of Mauritius has taken a series of policy

measures to encourage its flows into manufacturing offshore banking and

financial services information technology communication and tourism As far

as foreign investors are concerned Mauritius offers itself as an attractive

destination because several positive features such as political stability

10

availability of skilled labour and investment-friendly rules and institutions

(Stone 1997)

With such a promising economy there is virtually no evidence on how to

penetrate the business culture in Mauritius and how culture can affect SMEs

and business opportunities therefore this study will explore and understand

the business environment in Mauritius and the challenges of doing business

there as a foreign investor Currently there is very little research done on

SMEs and culture in Mauritius

13 Mauritius SME Background

Experience shows that attitudes towards small business vary from decade to

the next from country to country Before the industrial revolution all business

was small business but with industrial and commercial expansion of

developed nations small has become medium and medium has become big

business

Business owners and managers have often seen growth as an end in itself

and at time the cry get big or get out has been heard in most nations

(Meredith 2004) For more than two decades SMEs have experienced

favourable growth SME has long been prominent in the countrys economy

and make up a large portion of national economy in terms of output

employment and effective utilisation of regional resources Small and medium

enterprises in Europe make up 998 of all European enterprises provide

66 of its jobs and account for 65 of its business turnover (Meredith 2004)

11

In developing countries SMEs account more than 90 of all enterprises

Over the last five years they have been responsible for more than 80 of job

created (Stone 1997) On the issue of job creation Stone (1997) found that

SMEs create more employment than large enterprises and with a lower

investment per job created SMEs are not usually associated with international

activity but they do in fact play a significant international role and their

importance appears to be increasing Available data on SMEs international

activity are very limited (Stone 1997)

In general terms and depending on the country SMEs contribute between

15 and 50 of exports and between 20 and 80 of SMEs are active

exporters Overall it is estimated that SMEs now contribute between 25 and

35 of world-manufactured exports (UN 2005) Increased exports not only

boost the level of sales and employment but also extend the life cycle of

goods and services

In Mauritius SMEs represent 19 according to a report issued by the

Commonwealth Secretariat entitled a Study of Small Firm export Policies

and Institutions in Mauritius Subsequently these SMEs have developed

gradually and move from their tradition orientated operations to export-led

firms probably due to improvement of technology in the field of communication

and the new economic dimension which prevailed

At this juncture it is important to report that few studies on culture and small

and medium entrepreneurship have been conducted on Sub-Saharan Africa

12

There is a paucity of information and even those scarce studies they do not

cover broad perspectives of the situation of SMEs in Sub-Saharan Africa

Therefore this study builds upon the existing limited body of research

regarding how business cultures contribute to the success or failure of small

and medium entrepreneurs In particular it explores the business culture in

Mauritius and its barriers to penetration for new and foreign small and

medium entrepreneurs

14 Purpose Statement

The purpose of this study was to understand the concept on how to penetrate

an international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

15 Aims and Objectives

To investigate the challenges of national cultural differences in

business in Mauritius

To investigate how to penetrate the business environment for a new

and or foreign business culture especially in Mauritius

To investigate business opportunities for SMEs in Mauritius and how

these can benefit the locals

13

16 Research Question

How can Small and Medium Enterprises penetrate the business culture in

Mauritius

These sub-questions all pertain to SMEs business

o 161 SUB-QUESTIONS

What kind of businesses are operating in Mauritius now

What are their business strategies (marketing brands) etc

What are the necessary mechanisms for establishing business in

Mauritius

What are the business needs of established and starting businesses

What are the mechanisms for potential growth of local business

What are the challenges for doing business in Mauritius

How much of business behaviour is influenced by the national culture

17 The Significance of the Study

The findings of the current study will increase the understanding of cultural

barriers to market penetration for SMEs in Mauritius The study adds

knowledge to the body of literature in this area focusing at further

improvement of understudying of culture and business issues The

study becomes part of the universitys education development in line with its

obligations to the communities and the country This research problem arose

from an information need of a particular client This research therefore will try

to explore the client‟s information need and probably contribute to the wealth

of knowledge

14

18 Definitions

CULTURE Hofstede (1997) defines culture as ldquothe collective programming of

the mind which distinguishes the members of one group or category of people

from anotherrdquo It is the norms beliefs and values common to a society

Culture is about the way people understand their world and make sense of it

It only when this is taken for granted assumptions are challenged that people

realise that they even exist (Hofstede 1997)

ENTERPRISE An enterprise is considered to be any entity engaged in an

economic activity irrespective of its legal form This includes in particular

self-employed persons and family businesses engaged in craft or other

activities and partnerships or associations regularly engaged in an economic

activity (European Commission 2003)

INTERNATIONAL BUSINESS International business consists of transactions

that are devised and carried out across national borders to satisfy the

objectives of individuals and organizations The Primary Types of International

Business Activities Are Importing and Exporting Direct Foreign Investment

(Govindarajan and Gupta 2001)

GLOBALISATION refers to a bdquogrowing economic interdependence among

countries as reflected in the increased cross-boarder flow of three types of

entities goods and services capital and knowhow‟ (Govindarajan and Gupta

2001 4)

15

SMALL AND MEDIUM INTERPRISES (SME) is made up of enterprises

which employ fewer than 250 persons and which have an annual turnover not

exceeding EUR 50 million andor an annual balance sheet total not

exceeding EUR 43 million (European Commission 2003)

In Mauritius an SME has been redefined taking into account the volume of

investment in equipment which was previously one million up to 10 millions

Mauritian Rupees presently to be classified as a small enterprises and with

less than 50 and 200 employees for small and medium scale respectively

(Stone 1997)

16

CHAPTER TWO

LITERATURE REVIEW

The aim of this chapter is to introduce conceptual themes that are important in

order to understand the role of culture in international business The chapter

discusses the context of relationship between culture and international

business practices in small and medium enterprises (SMEs) and the major

challenges they face in the area of globalisation A model adopted from Putz

(2000) forms a framework for articulating the conceptual role that culture has

in international business using Mauritius as a case study

21 Embracing Cultural change in an era of globalization

A significant theoretical issue for international business is the role of culture in

the whole aspect of information transformation Since the landmark study by

Haire et al (1966) and the publication of Industrialism and Industrial Man by

Kerr et al (1960) researchers have continued to search for similarities in

culturally specific beliefs and attitudes in various aspects of work related

attitudes as well as consumption patterns and other behaviours If cultures of

the various communities of the world are indeed converging (Heuer et al

1999) International Business (IB) related practices would likely become

increasingly similar For example standard culture-free business practices

would emerge and inefficiencies and complexities associated with divergent

beliefs and practices in the past era may disappear (Heuer et al 1999)

17

Studies elsewhere suggest that culture gets affected by globalization practices

in the current 21st century Globalization has seen flows of information

technology money and people and is conducted via international

government organizations such as the African Union the North American

Free Trade Agreement (NAFTA) and the European Community global

organizations such as the International Organization for Standardization

(ISO) multinational companies (MNCs) Also includes cross-boarder alliances

in the form of joint ventures international mergers and acquisitions These

interrelationships have enhanced participation in the world economy and

have become a key to domestic economic growth and prosperity (Drucker

1995 153)

Literature suggests that because globalization tends to redistribute economic

rewards in a non-uniform pattern a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) Strong opposition to

globalization usually originates from developing countries that have been

affected by the destabilizing effects of globalisation However in recent years

there have been heated debates in Western economies triggered by

significant loss of professional jobs as a result of offshoring to low wage

countries (Schaeffer 2003)

Workers in manufacturing and farming in advanced economies are becoming

increasingly wary of globalization as their income continues to decline

18

significantly In parallel to the angry protests against globalization the flow of

goods services and investments across national boarders has continued to

fall after the rapid gains of the 1990s The creation of regional trade blocs

such as NAFTA the European Union and the Association of Southeast Asian

Nations have stimulated discussions about creating other trade zones

involving countries in South Asia Africa and other parts of the world

Although it is often assumed that countries belonging to the World Trade

Organization (WTO) have embraced globalization the fact is that the world is

only partially globalized at best (Schaeffer 2003)

Many parts of Central Asia and Eastern Europe including the former

republics of the Soviet Union parts of Latin America Africa and parts of

South Asia have raised heightened scepticism about globalization (Greider

1997) In fact less than 10 of the world‟s population are fully globalized (ie

being active participants in the consumption of global products and services)

(Schaeffer 2003)

According to Guile`n (2001) these trends might indicate that globalization is

being impeded by tendencies towards country-specific modes of economic

development making the convergence of IB-related values and practices

difficult to achieve Hofstede (1980)‟s favourite definition of f ldquoculturerdquo is

precisely that its essence is ldquocollective mental programmingrdquo it is that part of

peoples conditioning that they share with other members of their nation

region or group but not with members of other nations regions or groups

Hofstede (2001) asserts that these mental programs of people around the

19

world do not change rapidly but remain rather consistent over time His

findings tend to suggest that cultural shifts are relative as opposed to

absolute Although clusters of some countries in given geographical locales

(eg Argentina Brazil Chile) might indicate significant culture shifts towards

embracing Anglo values the changes do not diminish the absolute differences

between such countries and those of the Anglo countries (ie US Canada

UK)

According to Hofstede (1980) Examples of differences in mental

programming between members of different nations can be observed all

around us One source of difference is of course language and all that

comes with it but there is much more In Europe British people will form a

neat queue whenever they have to wait not so the French Dutch people will

as a rule greet strangers when they enter a small closed space like a railway

compartment doctor‟s waiting room or lift not so the Belgians Austrians will

wait at a red pedestrian traffic light even when there is no traffic not so with

the Dutch Swiss tend to become very angry when somebody-say a foreigner

makes a mistake in traffic not so with the Swedes All these are part of an

invisible set of mental programs which belongs to these countries‟ national

cultures Such cultural programs are difficult to change unless detaches the

individual from his or her culture Within a nation or a part of it culture

changes only slowly (Hofstede 1980)

20

This is the more so because what is in the minds of the people has also

become crystallized in the institutions namely government legal systems

educational systems industrial relations systems family structures religious

organizations sports clubs settlement patterns literature architecture and

even in scientific theories All these reflect traditions and common ways of

thinking which are rooted in the common culture but may be different for other

cultures (Hofstede 1980)

22 The dynamics of Culture as a Multi-level Multi- layer construct

Multi-level approaches of viewing culture as a multi-level construct that

consists of various levels nested within each other from the most macro level

of a global culture through national cultures organisational cultures group

cultures and cultural values represented the self aspect of the individual See

figure 3

21

Figure 3 The dynamic of top-down-bottom up process across levels of

culture (Source Schein 1992)

The model proposes that culture as multi-layer construct exist at all levels

from global to the individual Changes that take place at the external layer of

behaviour are most likely shared by individuals who belong to the same

cultural background level hence characterising the aggregated unit (Schein

1992)

Top-

Down

Individual

Behaviour

Values

Assumptions

Global Culture

National Culture

Organizational Culture

Group Culture

Bottom

Up

22

Below the global level are nested organizational layers or networks at the

national level with their local cultures varying from one nation or network to

another Further down are local organizations and although all of them share

some common values of their national culture they vary in their local

organizational cultures which are also shaped by the type of industry that

they represent the type of ownership the values of the founders etc Within

each organization are sub-units and groups that share common national and

organizational cultures but differ from each other in their unit culture based on

differences in functions of their leaders‟ values and the professional and

educational level of their members At the bottom of this structure are

individuals who through the process of socialization acquire the cultural values

transmitted to them from higher levels of culture Individuals who belong to the

same group share the same values that differentiate them from other groups

and create a group-level culture through a bottom-up process of aggregation

of shared values (Schein 1992)

Both top-down and bottom-up processes reflect the dynamic nature of culture

and explain how culture at different levels is being shaped and reshaped by

changes that occur at other levels either above it through top-down

processes or below it through bottom-up processes(Schein 1992) Similarly

changes at each level affect lower levels through a top-down process and

upper levels through a bottom-up process of aggregation The changes in

national cultures observed by Inglehart and Baker (2000) could serve as an

23

example for top-down effects of economic growth enhanced by globalization

on a cultural shift from traditional values to modernization

In view of the complexity of the organizational structures specific

organizational structures that have global character need to be established so

as to adopt common rules and procedures in order to have a common

bdquolanguage‟ for communicating across cultural borders (Kostova 1999 Kostova

and Roth 2003 Gupta and Govindarajan 2000)

Given the dominance of Western Multi National Companies (MNCs) the

values that dominate the global context are often based on a free market

economy democracy acceptance and tolerance of diversity respect of

freedom of choice individual rights and openness to change (Gupta and

Govindarajan 2000) The multi-level structure explains how a lower-level

culture is being transformed by top-down effects and that the cultural layer

that changes first is the most external layer of behaviour In the long run

bottom-up processes of shared behaviours and norms would affect the local

organizational culture as well (Schein 1992)

23 International Business and Culture

Knowledge of cultural differences is one of the key components in

international business practices and success Improving levels of cultural

awareness can help companies build international competencies and enable

individuals to become more globally sensitive (Hofstede 2003) Indeed

cultural differences contribute towards different ways people behave in

24

business Research in the field of international management underscores that

the attributes of cultural knowledge used by a firm play an important role in the

firms expansion For example Martin and Salomon (2003) found that cultural

orientation in entrepreneurial action is a central theme and can serve as a

starting point for immigrant business

ldquoUnderstanding the culture and the conceptualisation of culture in conjunction with entrepreneurial action is a critical issue when doing business in an international environment Contributions of economic geography inspired by the cultural turn which shows alternative ways of thinking about the connection between culture and economy by using a new understanding of culture are also critical (pg 198)rdquo

The statement underscores the important of understanding the culture of a

society before attempting to do business there otherwise the company runs a

risk of going out of business The ways in which different groups of people

interpret their environment and organise their activities is based the on the

specific cultural values and assumptions Certain values often thought to be

universal really do differ from culture to culture What constitutes an ethical

business practice is not the same everywhere This can be an enormously

difficult area in managing business across cultures (Straub et al 2002)

Although one may claim cultural differences to be going away they are

actually being absorbed in the business practices This makes it more critical

than ever to try to understand different cultures and their influence on the

ways people do business and view the world The costs of not understanding

are getting greater than ever The essence of culture is not what is visible on

the surface It is the shared views about what people understand and interpret

25

the world These cultural differences are crucial influences on interactions

between people working and managing across culture (Gertler 1997)

The social behaviour of a society is embedded in a particular context and is

connected to other deeply held values and beliefs (Weisinger and Trauth

2003) This means that the stakes are high for mismanaging cultural

differences Ignoring or mishandling differences can result in an inability to

retain and motivate employees a misreading of the potential of cross-border

alliances marketing and advertising blunders and failure to build sustainable

sources for competitive advantage Mismanaging cultural differences can

render otherwise successful managers and organisations ineffective and

frustrated when working across cultures (Weisinger and Trauth 2003)

24 Putz Model For Immigrant Business and Culture

Literature in the field of Immigrant Business differentiates mainly between two

basic approaches each with a different emphasis which are combined to

explain entrepreneurial action of immigrants (Putz 2000) The first approach

emphasis the bdquoopportunities‟ offered by the host country including access to

the market and job market conditions The second approach focuses on the

bdquoresources‟ of migrant groups from whom the concept of culture becomes

essential (see Figure 1 below)The Putz (2000) cultural model below is a

summary of explanatory approaches following the assumption that self

employment of certain groups is the result of their specific cultural

predisposition which favours business activity

According to Putz‟s (2000) view of cultural model the bdquoopportunities‟

approach which refers to market possibilities as an explanation for self

26

employment of immigrants assume that there are certain market segments

with favourable development perspectives especially for immigrant groups

Here two factors receive special attention which are niche markets and legal

and institutional frameworks Niche markets make the establishing of business

by immigrants easier because their needs for consumer goods create specific

demand Legal and institutional frameworks gain awareness in international

comparative studies through restrictions specified by a country regarding

business permits and regulations these frameworks influence both the extend

and the sectored structure of the bdquoimmigrant business‟ (Putz 2000)

According to Putz (2000) the observation that most immigrant groups show a

higher level of self employment rate than others often forms the background

explanation which focus on opportunities created by the host society

Resource models stress the shared characteristics of migrants of same origin

Resources models explain that certain groups have specific cultural

resources which make it easier for members of that group to become self

employed therefore one can distinguish between the cultural traditions and

socialethnic networks ( Putz 2000)

27

Figure 4 Dominating models concept of bdquoImmigrant Business‟ (Source Putz

2000)

OPPORTUNITIES

Market Access

Possibilities

Market Conditions

Niche Markets

lsquoOpenrsquo Markets

Job Market

Conditions

Access

Vertical Mobility

Legal and Institutional

Frameworks

lsquoEthnicrsquo

Business

RESOURCES

lsquoClass Resourcesrsquo lsquoCultural Resourcesrsquo

Cultural

Traditions

Social lsquoEthnicrsquo

Resources

28

When successfully managed differences in culture can lead to innovative

business practices faster and better learning within the organisation and

sustainable sources of competitive advantage (Sondergaard and Hofstede‟s

1994) In relation to that the current study argues that managers need to

study and understand the culture and the niche market before investing This

assumption has been raised as a result of the previously reported experiences

and research findings already reported so far It is therefore critically important

to understand that every society has got its own way of behaving which needs

to be understood if the business is to succeed Operating companies need to

understand what their business means to the people of the given community

and their culture

Several studies of international business have indicated that

internationalization of the firms is a process in which the firms gradually

increase their international involvement(Johanson amp Wiedersheiml 1995

Gibson 1999 Chui et al 2002 ) It seems reasonable to assume that

within the frame of economic and business factors the characteristics of this

process influence the pattern and pace of internationalization of firms Figure

5 below shows a model of the internationalization process of the firm that

focuses on the development of the individual firm and particularly on its

gradual acquisition integration and use of knowledge about foreign markets

and operations and on its successively increasing commitment to foreign

markets The basic assumptions of the model are that lack of such knowledge

is an important obstacle to the development of international operations and

that the necessary knowledge can be acquired mainly through operations

abroad (Johanson and Wiedersheiml1995)

29

FIGURE 5 The Basic Mechanism of Internalisation- State and Change Aspects

Figure 5 Basic Mechanism of Internalisation (Source Johanson amp

Wiedersheiml 1995)

Market knowledge and market commitment are assumed to affect both

commitment decisions and the way current activities are performed These in

turn change knowledge and commitment ( Aharoni 1966) In the model it is

assumed that the firm strives to increase its long-term profit which is

assumed to be equivalent to growth (Williamson 1966) The firm is also

striving to keep risk-taking at a low level These strivings are assumed to

characterize decision-making on all levels of the firm Given these premises

and the state of the economic and business factors which constitute the frame

in which a decision is taken the model assumes that the state of

internationalization affects perceived opportunities and risks which in turn

influence commitment decisions and current activities (Johanson amp

Wiedersheiml 1995)

Market

Knowledge

Market

Commitment

Commitment

Decisions

Current

Activities

30

2 5 The Role Of Information Communication Technologies

Hofstede (2001) observed that not only will cultural diversity among countries

persist but also new technologies might even intensify the cultural differences

between and within countries Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

Information communication technologies (ICTs) enable users to access varied

amounts of information globally however it does not necessarily increase

their capacity to absorb the information at the same rate as the information is

disseminated or diffused (Bhagat et al 2002) In addition information and

knowledge are interpreted through cultural lenses and the transfer or diffusion

of organizational knowledge is not easy to accomplish across cultural

boundaries (Bhagat et al 2002)

Ethnic groups around the world observe the lifestyles and cultural values of

other countries and some are interested in adopting part of the lifestyle and

values but others reject it completely (Kirkman and Shapiro 2000) The

effects of new technologies on improving efficiencies of multinational and

global corporations are well known but it is not known how these new

technologies especially computer-mediated communication and the Internet

31

might create significant shifts in the cultural patterns of different ethnic groups

(Kirkman and Shapiro 2000) or on their ways of doing business

In essence there in need to explore how the spread of ICTs is affecting the

progress of globalization in different parts of the world by incorporating the

role of cultural syndromes organizational cultures and other processes

which has recently been attempted by scholars such as Bhagat et al (2003)

and Gibson and Cohen (2003)

Information and Communications Technology (ICT) has become a catchword

with different interpretations and viewpoints even among experts As the

name suggests ICT encompasses all the technology that facilitates the

processing transfer and exchange of information and communication

services In principle ICTs have always been available since the advent of the

printing press The only difference is that from the late twentieth century rapid

advances in technology changed the traditional ways in which information was

processed communications conducted and services available (Adu 2002)

These technological advances have changed business operations and the

way people communicate They have introduced new efficiencies in old

services as well as numerous new ones One could even imagine going as far

as replacing the term Post-industrial Society with ldquoInformation Society that

is a society where the ability to access search use create and exchange

information is the key for individual and collective well-being (Kaplan 2001)

32

Globally entrepreneurship is considered as the engine of economic

development The SME sector has the potential to address socio-economic

challenges facing both developing and developed countries Without small

business development it is argued that economies stagnate unemployment

levels continue to rise and the general standard of living deteriorates

Information and communications technology (ICT) has been identified as a

major area of need to develop the SME sector in areas of information

provision access to national and international markets and other areas of

business development and support ( Ferrand and Havers 1999)

ICTs enable entrepreneurs to manage their businesses efficiently and thus

enhancing their competitiveness in the global market They can increase their

geographic reach improve efficiency in procurement and production and

improve customer communications and management For these reasons the

need to encourage and accelerate the uptake and optimal application of ICTs

by SMEs in different sectors of the economy cannot be overemphasized

(Ramsay et al 2003) The ICT sector has the potential to absorb prospective

entrepreneurs considering various business opportunities offered by the

sector Some of the business opportunities available within the sector relate to

systems integration application development database administration web

design and internet service provision The sector is also seen as an area with

major opportunities for the historically disadvantaged sectors of the

population It therefore becomes imperative for government to provide

mechanisms to accelerate the entry of SMMEs into the ICT sector (ILO 2001)

33

26 Cross Culture and International Business

Cross-cultural management advice rests on several assumptions in the

tradition of Hofstede (1997) that a) that national culture is comprised of norms

and values that can be readily identified and addressed b) that these norms

values and patterns of behaviour are stable and change at an extremely slow

pace and c) that national culture predominates over organizational culture

epistemic culture gender or other determinants of attitudes and behaviour

According to Hosftede (1997) national culture is comprised of norms and

values that can be readily identified and addressed

Organisational culture (common values and attitudes) affects organizational

success and innovation develops over time and may be difficult to change

ldquoThere is a relationship between an organization‟s culture and its

performance The pervasive nature of organizational culture means that if

change is to be brought about successfully this is likely to involve changes to

culturerdquo (Mullins 1999)

An alternative view sees culture as more complex context-specific and

dynamic For example Weisinger and Trauth (2003) examined the interaction

of national cultures the IT industry culture and a particular firm‟s

organizational culture They observed that the resulting situated culture ldquois

fluid contextually dependent and created by actors within a group who may

hold conflicting assumptions and world viewsrdquo In other words culture is as

what it is because of what it does This means that management must ensure

34

that key capabilities for example marketing analytics or process controls are

developed and nurtured across the organization

Successful global managers recognize that they cannot respond to every

unique opportunity that local settings offer Thus there is an inherent tension

in cultural sensitivity a management team which is ldquotoo sensitiverdquo to cultural

and structural features exposes the organization to the risks that come with a

lack of focus and coherence while managers who do not take cultural and

structural features into account expose the organization to the risks that come

with organizational rigidity (Myres and Tan 2002)

According to Mistry (1999) entrepreneurial networks and clusters in sub-

Saharan Africa have not generally produced the kind of strong transnational

links that characterize Asia‟s flourishing pattern of industrial diffusion The

author states that the reasons for this are complex differences in geography

different models provided by leading countries in the neighbourhood and

policies adopted by governments in the respective regions Chinese business

networks are responsible for some of the information ideas and capital that

helped launch the small Indian Ocean nation of Mauritius as an important

centre for export-oriented industry The Chinese networks in Mauritius also

continue to facilitate a role that Mauritius first began to play in the eighteenth

century they serve as a gateway for overseas Chinese entrepreneurs

interested in investing both in Mauritius and elsewhere in Africa (Mistry 1999)

35

27 Investing in Mauritius

There are a lot of advantages in investing in Mauritius The economy of the

country is stable and the graph of the economy and business is one the rise

for a considerable period of time The Mauritius government has undertaken a

sequence of strategic measures to support its course into offshore banking

manufacturing and financial services communication technology and tourism

keeping in mind the significance of foreign investment as a basis of

nourishment of the financial development (Dabee and Greenaway 2001)

According to Dabee and Greenaway (2001) tthere are various factors that

influence financiers to invest in Mauritius like accessibility of skilled labor

political constancy and venture-friendly institutions and regulations One of

the major factors for the development of Mauritius is the Foreign Direct

Investment (FDI) The government of Mauritius has given all the necessary

support to create the most favorable investment setting by the following steps

Building modern infrastructure

Endorsing suitable legislations

Commencing packages of investment inducements

Investing in human capital

Some of the advantages of investing in Mauritius are as follows

High-quality infrastructure with superb transportation

Democracy and a steady government

Free market financial system fastened on export slanting activities

Excellent system of sea and air transport

36

High standard of living good international schools

A highly educated bilingual and responsive work force

Knowledgeable financial segment providing outstanding services

Constructive market contact and good inducements ( IBP 2002)

Mauritius has various sectors where investment can be made like Information

and Communication Technology and manufacturing For doing business in

Mauritius registered trademark is required The trade marks for business are

issued by the registered Patents and Trademarks sector of Ministry of Foreign

Affairs International Trade and Cooperation In the country of Mauritius a

foreigner is eligible to hold 100 shares In this case one of the directors of

the company has to inhabit in Mauritius and the foreign individual has to

obtain a sanction from the Office of Prime Minister (IBP 2002)

In Mauritius the laws concerning income tax is based on the English law of

income tax The companies in Mauritius are lawfully accountable to pay out

income tax on their profits at an even rate of 25 A company which is

included in the country or has its scheming benefit in the country is measured

for tax reasons to be an occupant corporation To the Mauritius companies

various types of tax incentives are granted The companies that hold

certificate for Tax inducement are responsible to tax at an abridged rate of

15 while the scheduled companies are accountable to pay tax at the rate of

25 ( Dabee and Grrenaway 2001)

37

CHAPTER THREE

METHODOLOGY

Having looked at culture to some depth this chapter explains the methods

used in carrying out the study The study used mixed method approach to

allow for data corroboration and dynamism since the subject in question

needed dynamism and sensitivity in approach

This research mixed both qualitative and quantitative approaches to try and

get best possible research by combining both features because they

complement each other Quantitative data techniques condense data in order

to get a bigger picture whereas qualitative techniques are data enhancers

making it possible to see issues more clearly (Dawson 2002 Neuman 2000)

Attempt was made to keep in line with recommendation made in the Leeds

Declaration proposition number 6 which calls for the application of multiple

methods and perspectives to try and understand social and cultural issues

(Hunter and Lang 1993) Mixing qualitative and quantitative methods also

called positivist and interpretive respectively (Gilbert 2001 and Bowling 2002)

is effective in a complex issue study such as this one because they highlight

different perspectives of the same problem in this case - the public in parallel

with the individual level(Gilbert 2001) This is because quantitative methods

adopt a numerical approach to data collection and analysis to provide macro

level perspective whereas qualitative methods provide micro level perspective

through collecting data from individuals (Ibid)

38

There was also use of impersonal (public) documentation using official

records which were more library based research (Grbich 1999) on top of

theory generating field based methods (Ibid) Many researchers (Bowling

2002 Neuman 2000 Grbich 1999 Denscombe 2003 and Gilbert 2001)

concur that neither of the methods is superior to the other but just different

each having its strengths and weaknesses (Dawson 2002)

The study sought to explore the attitudes behaviour subjective meanings and

experiences of the participants making qualitative approaches best suited

because they emphasize the importance of context (Neuman 2000) However

to generate objective and factual (Maynard and Purvis 1994) statistical

figures quantitative research was more suitable Hence mixing of methods

(Dawson 2002 Denscombe 2003) to counteract weaknesses in both

approaches to give breadth and width to the study (Maynard and Purvis

1994) The flexibility of qualitative research allowed for re-focusing and

refinement of the tool dependent on participants‟ reactions throughout

(Neuman 2000) to pick up any emerging evidence thus applying the

grounded theory approach (Dawson 2002)

39

31 Research Setting

Mauritius is a volcanic island of lagoons and palm-fringed beaches in the

Indian Ocean Southern Africa east of Madagascar with a population of

about 12 million has a reputation for stability and racial harmony among its

mixed population of Asians Europeans and Africans The island has

maintained one of the developing worlds most successful democracies and

has enjoyed years of constitutional order since independence in1968 Over

the past three and half decades the country has been transformed from one

of the poorest in the world to a middle income country with per capita Gross

Domestic Product US $7000 (World Bank 2006) It has preserved its image

as one of Africas few social and economic success countries that mainly

depends on sugar and clothing export and a centre for upmarket tourism But

Mauritian exports have been hit by strong competition from low-cost textile

producers and the loss of sugar subsidies from Europe Consequently

attention has turned to diversification in line with global trends

To this end SMEs have been identified as important instruments to achieve

economic diversification Today the government vigorously supports SMEs

through a range of strategies eg the creation of a business friendly climate

via import liberalisation tax reforms and the launch of the SME Partnership

fund which gives subsidized loans to aspirant SME owners and makes the

availability of finance and facilitating access in particular for those enterprises

that have viable projects but are short of equity The Small Enterprises amp

Handicraft Development Authority (SEHDA) was created following the merger

of the Small amp Medium industries Development Organisation (SMIDO) and the

National Handicraft Promotion Agency (NHPA) The aim of the merger is to

40

rationalize and optimize the use of resources dedicated to the small business

sector in Mauritius

Various cultures and traditions flourish in peace though Mauritian Creoles

descendants of African slaves who make up a third of the population live in

poverty and complain of discrimination Mauritius was uninhabited when the

Dutch took possession in 1598 Abandoned in 1710 it was taken over by the

French in 1715 and seized by the British in 1810 The culture of the country

reflects its diverse ethnic composition There are many religious festivals

some important ones being (in random order) Divali (the hindu festival of

lights in October) Christmas Cavadee (a penitence festival of the south

Indian tradition of hinduism in January) Eid ul Fitr (celebrating the end of the

period of fasting in Islam As the Islamic calendar does not correspond to the

Gregorian calendar the date of its celebration in the year tends to vary In

2003 it was celebrated in November) With such a strong history diverse

culture and such a promising economy painted above makes Mauritius a rich

setting to investigate culture and small medium business entrepreneurship

32 Methods

As justified already this study applied method mix to exploit the benefits of all

methods used while minimising the effects of their weaknesses The obvious

benefit of method mix is that it involves more data which is likely to improve

the quality of research (Denscombe 2003) and that is what the researcher

sought to achieve In deciding which method to use it was acknowledged that

the chosen methods were not superior in any way but more suited to the study

41

circumstances based on the premise of ldquohorses for courses (Denscombe

2003 page 83)

A Questionnaire used in the online web survey allowed for collection of

data from large numbers of participants economically since the project had

financial and time limitations (Ibid) The other advantage of survey exploited is

generation of quantitative data However weaknesses of the method

(empiricism lack of depth and accuracy of responses) were a challenge The

questionnaire was open ended and was completed by the participant in the

absence of the researcher Any questions arising from the participant not

understanding or misinterpreting the question where not taken care of Focus

groups were used to gain depth into some of the emerging issues from

questionnaires to gain insights into the issues surrounding widow inheritance

and to validate some of the data (Denscombe 2003) Telephone and face to

face interviews were used to gather to gain in-depth information on the

issues

All accessible literature on culture and investment in Mauritius as well as

other parts of Africa was reviewed to get insight into any related work to

identify key issues and current knowledge gap so as to sign post this study for

any audience (Ibid)

42

33 Research Participants and sampling

It was difficult to get exact demographic data for each sector Consequently it

was not possible to use any scientific sampling techniques The study

therefore used non-probability sampling (Neuman 2002 Bowling 2002

Denscombe 2003) targeting urban based population

The sample baseline characteristics were

SME managers from aged 18 years and above and over 65 was the

limit Any religion faith Any socio-economic background and residents

of Port Luis and surrounding areas

To sample for quantitative data purposive and snowballing sampling

techniques were used because it was not possible to apply any statistical

formula in getting the samples since there was no single list of SME managers

and other stakeholders to use with any form of probability sampling

Participants were snowballed from one sector to another until the whole

sectors were covered For the focus groups homogenous and critical case

(Grbich 1999) sampling was used to get particular sub group to provide

details In this case to get government officials and the private sector who

were strong enough to talk about their experiences

A total of 161 participants were reached from all the sectors These included

SME manager government officials and the private sector The researcher

wishes to point out that these numbers were not conclusive The numbers

could be much higher because in case the researcher phoned the participants

they were not available to take the call there was no time to go back to

43

ascertain the details Those who were not willing to take part in the study were

also excluded from the above figures For the focus groups discussions 5

government officials and the private widows were invited and used Skype

technology to do a conference

The times when the participants were contacted met were entirely dependent

on participant availability and other events at the time (Gilbert 2001) It varied

between 800 am and 700 pm in the evening because of the time differences

UK and Mauritius time Care was taken to avoid compromising times such as

late in the evening or culturally sensitive days such as weekends when people

were engaged in funerals and church services in this case

The participants showed weariness towards the study because as they put it

ldquoa lot of people come along claiming to collect data to help but never show up

againrdquo

34 Data collection Instruments

The researcher developed an online quantitative data collection questionnaire

(web survey form) which was posted on the university web server with help of

the department technicians A multiple recipient list was created from the

details in the SEHDA website and was randomly sent to the recipients These

only included the SME managers from the seven sectors About 20 contacts

were selected from each sector which made a total of 140 participants

Telephone interviews were made to about 17 government officials and the

private sector who were later divide n to focus groups and a teleconferencing

44

was organised on Skype Face to face interviews were done with government

officials from the Mauritian High Commission in the UK

Apart from the questionnaire an Olympus VN 2100 PC Digital Voice Recorder

was also used during the focus group discussion with the permission of

participants also on telephone interviews and face to face interviews This

was tested set and correctly positioned by the telephone speaker before the

session began to ensure proper functioning It was fitted with a mini

microphone to improve recording quality The digital voice recorder small in

size (only 68 grams in weight) proved user friendly because it was not

intruding too much into the face of participants as opposed to older recording

devices There was a pair of AAA batteries on standby in case the batteries in

use ran flat during the session

35 Ethical Considerations

This study involved very little of sensitive issues but it strived very much to

adhere to the fundamental principles of Human Research Ethics of Respect

for Persons Beneficence and Justice The researcher ensured autonomy self

determination and protection of vulnerable persons through informed consent

participation confidentiality and thorough explanation of what the research

was all about to those with limited knowledge and education Any risk that

might have resulted from the study was minimised as much as practically

possible and the researcher took full responsibility for the protection of

participants There was no form of discrimination other than on participant

baseline characteristics

45

The study also upheld the six key ethical research principles as stipulated by

ESRC - UK (ESRC 2005) To ensure anonymity pseudonyms were used for

participants The information gathered was safely protected through password

use on the computer system and only the researcher had access to the

information The researcher was responsible for storage and destruction of

any information no longer needed such as audio files after transcription

Research respondents participated in a voluntary way free from any coercion

and free to withdraw at any point should they felt uncomfortable

The first ethical committee whose approval was sought was the University of

Sheffield Ethical committee after which the researcher sought ethical approval

from Mauritian authorities through the relevant ministries It was not straight

forward getting ethical approvals in Mauritian but ultimately the ministry of

SMEs approval was obtained

36 Procedure

After all the necessary approvals were obtained the researcher wrote an

explanatory letter (Grbich 1999) or bdquoparticipant‟s information sheet‟ (appendix

5) which included information on informed consent (Denscombe 2003)

After piloting the tools the researcher started by making calls to make

appointment for interviews As the quantitative data collection went on

recruitment of participants to take part in qualitative aspect was done

simultaneously due to time constraints The researcher used individual

judgement to asses those participants who would be courageous enough to

respond to the questionnaire online and to the interviews The managing

46

director for RCBusiness Support Ltd also provided a number of potential

respondents who were used at the initial stages of the study Each interview

session lasted averagely 50 minutes The researcher went to organise the

teleconferencing for the focus group on Skype which also lasted for average

50 minutes

37 Data Analysis

Since the distinction between quantitative and qualitative research is not

watertight (Denscombe 2003) data analysis embraced both because they

have similarities and differences (Neuman 2000) There was analysis of

words and numbers thus holistic versus specific focus (Denscombe 2003)

The analysis adopted a five stages approach (Denscombe 2007) The first

stage was data preparation followed by data exploration analysis

presentation and finally validation

Though some researchers champion for advanced inferential statistics

(Denscombe 2007) the researcher opted for descriptive statistics for the

quantitative data analysis because they still remain effective ways of data

analysis and presentation (ibid) The research data involved nominal as well

as discrete and continuous data which could effectively be analysed using the

chosen method The data was grouped frequencies were described and

finally any linkages were identified The end product of the analysis process

is presented in the results section in various formats Basic statistical

techniques were used to give the data additional credibility in terms of

interpretations of the findings (Denscombe 2007)

47

For the qualitative data the first thing was to back up the original voice

recorded focus group discussion into a password protected lap top This

ensured not only the security of the data but also a back up in case of data

loss The researcher then listened to the recording several times to familiarise

himself with the data after which transcription took place After that the data

was interpreted and categories themes were identified since thematic

analysis was employed The Putz (2000) model was used as a guide to

finding themes The findings are presented in the results section

38 Planned programme of dissemination

The study findings were disseminated to all relevant stakeholders in print

format including the university as part of the postgraduate degree requirement

in academically fulfilling format Two copies of the report were sent to the

Ministry of SMEs in Mauritius and two copies to the Board of Investment of

Mauritius in the UK as part of the requirements of ethical approval and

research permission granted by the ministry

Finally it was hoped that the report would meet publication requirements so

that it could get a wider audience through a reputable journal

48

39 Time scale

The study was anticipated to take the following breakdown from the time all

ethical approvals and consent were obtained

Table 1 Table showing the study time scale

Stage Time allocation Action item Accountable person

I Weeks 1 - 3 Research set up Sampling and

access to participant negotiations

Angelinah Boniface

II Weeks 4 - 12 Data collection and Analysis Angelinah Boniface

III Weeks 12 - 16 Analysis Report writing and

dissemination

Angelinah Boniface

310 Limitations and Delimitations

This study was not fully funded as such high telephone costs travelling

affected the exercise Only business people in Mauritius both men and women

were interviewed The study covered both local and foreign investors

Participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

49

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

A major limitation is a low response rate of the questionnaire and therefore a

representative sample of the SME population was not achieved Thus any

conclusions made from the analysis of the collected data cannot be

generalized to the broader SME population Bias may have been inadvertently

introduced during interviewing caused from such things as leading questions

50

CHAPTER 4

RESEARCH FINDINGS AND DISCUSSION This chapter aims to discus the research findings from the study The chapter

is divided into two sections the first part presents and discusses the

quantitative data and the second part discusses qualitative It is therefore

worth mentioning that the Putz (2000) model was used to guide the

qualitative data analysis and some of the themes were taken from the model

and some were generated from the research findings It must be noted that

any findings uncovered from this study cannot be generalized to the broad

public domain regarding SMEs

Section A of the questionnaire and the interview guide included questions that

collected background information on the SME managers and the responding

firms These data constitute the substantive material for analysis in the

ensuing sections The tables below depict the socio demographic

characteristics of the survey participants age group gender educational level

and experience as ownermanager In the following sections there aspects

are discussed

51

41 RESPONDENTS RATE ACCORDING TO SECTORS

TABLE 2

SECTOR SEHDAS SURVEY SENT

SURVEY RECEIVED

RESPONSE RATE

Leather and Garments

1678 20 12 60

Wood and Furniture

2196 20 11 55

Paper Products and Printing

1541 20 9 45

Chemical Rubber and Plastic

1376 20 11 55

Pottery and Ceramic

793 20

17 85

Jewellery and Related Items

1674 20 13 65

Fabricated Metal Products

1267 20 14 70

TOTAL 7 140 101 72

Table 2 shows the response rates from various sectors of SME in Mauritius

which were targeted by the online survey As the table indicates pottery and

ceramic sub sector had the highest response rate (85) with paper products

sector giving the least response rate (45) Overall 72 response rate from

all the targeted sectors was satisfactory It is worth mentioning that the total

number of participants adds to 140 since this question was only directed to

sectors not to other stakeholder in the research sample

52

42 DEMOGRAPHIC PROFILE PARTICIPANTS

TABLE 3 AGE GROUP AS PER PARTICPANT

AGE GROUP FREQUENCY PERCENTAGE

-25 7 43

26-35 34 211

36-45 53 329

46-55 35 217

56-65 22 137

gt 65 11 63

TOTAL 161 100

Evidence from most of entrepreneurial literature suggests that self-

employment becomes an increasingly attractive option as one nears middle

ages As can be seen in table 3 respondent‟s ages ranged from 25 to 65 and

the largest proportion (329) of the participants was in the age range of 36ndash

45 Additionally participants were biased towards the age ranges of between

36 and 65 and away from the under 25 and over 65

TABLE 4 GENDER PROFILE AS PER PARTICIPANT

GENDER

Male 116 720

Female 45 280

TOTAL 161 100

53

In relation to gender the research sample was predominantly male (72) a

striking although unsurprising demographic characteristic that reflects the

composition of the larger business sector in the country as a whole

Consequently only (28) were females This is clearly illustrated in table 4

above

TABLE 5 EDUCATION PROFILE AS PER PARTICIPANT

EDUCATIONAL LEVEL

Primary 8 50

Junior-level 29 180

O-level 78 484

Diploma 34 211

Higher Degrees 12 75

TOTAL 161 100

As evident from table 5 the educational levels attained by respondents varied

considerably as follows Primary School Certificate (8 or 5) Junior

Certificate (29 or 180) Ordinary Level (78 or 484) Diploma (34 or

211) and higher Degrees (12 or 75 ) On the whole though the data

suggest that the educational levels of our respondents are low the largest

proportion (398) possessing an Ordinary Level certificate

54

TABLE 6 YEARS EMPLOYED AS CEO AS PER PARTICIPANT

Years Of Employed as CEO

0-3 44 273

4-7 88 546

8-14 15 94

15-19 11 68

Over 20years 3 19

TOTAL 161 100

Not surprisingly table 6 shows that most of the responding executives did not

have education that emphasized a business curriculum This can be

understood with respect to the Mauritian educational curriculum which largely

overlooked business subjects until very recently

The research sample participants had been employed at their current firms on

average 1467 years and had an average of 12 years experience in the

manufacturing industry Four predominant job titles used by the senior

executives emerged from the questionnaireinterview responses Managing

Director (38) Director (26) Manager (20) and Chief Executive Officer

(16)

55

43 CHARACTERISTICS OF RESPONDING FIRMS

This section presents the descriptive statistics of the responding firms The

description focuses on age of the firm employment size firm revenues and

firm ownership

TABLE 7 COMPANY AGE PROFILE

Age of Company Frequency Percentage

1- 3 years 44 314

4- 6 years 68 486

7-10 years 19 136

11-15 years 7 50

Above 15 years 2 14

TOTAL 140 100

Table 7 displays the statistical data Of the firms responding the largest

proportion (486) was 4 to 6 years old Overall the sample reveals a skewed

distribution towards the ranges between 4 and 15 Also it is interesting to note

that 915 of the responding firms are mature that is beyond the start-up

phase

TABLE 8 EMPLOYEE PROFILE AS PER PARTICIPANT

Number of Employees

50-99 101 721

100-200 39 279

TOTAL 140 100

56

Unsurprisingly the vast majority of the responding businesses had fewer than

100 employees as depicted n table 8 with the largest proportion (701) in

the 50ndash99 employee categories The study found out that most small

companies would opt to have family and relatives as employees to minimise

costs Only 32 average of the firms were medium-size The preponderance

of small firms in the sample mirrors a more general pattern of firm distribution

in the country where medium and large firms are a conspicuous small

minority

TABLE 9 ANNUAL SALES AS PER COMPANY

Annual Sales

Less than R100 000 88 629

R101 000- R250 000 36 257

R251 000- R15 million 11 79

Above 15 million 5 35

Total 140 1000

As shown in table 9 the largest proportion of responding firms 88or 629

achieved a turnover below R10000000Only scant 11 or 79 posted annual

revenue in excess of R15 million

57

TABLE 10 OWNERSHIP AS PER PARTICIPANT

Ownership

Wholly Citizen 76 550

Joint Venture 42 293

Foreign Owned 22 157

TOTAL 140 100

Regarding ownership table 10 shows that an overwhelming majority or 550

of firms were wholly citizen-owned while the remaining 293and 157

were joint venture with citizen stake and foreign-owned respectively

44 Language

From most of the participants investors do not have to learn Local Mauritius

language since English and French are the official languages in the country

Since most of the investors to Mauritius are either English or French speaking

language as such is not a barrier to business practices and success for

prospective investors

ldquohellipwell it is not very important for foreign investors to learn languages

spoken in Mauritius because we can speak both English and Frenchrdquo

[Participant A5]

ldquohellipactually language is not barrier to English or French speaking investorsrdquo

[Participant A21]

58

Language is perhaps the most complex and perplexing aspect of the

Mauritian social mosaic (Rassool 1996) Contrary to the results that show that

language is not a problem for investors since most of the investors who come

to Mauritius are English or French speakers who normally fits well in the

society since these are the two official languages

This intricacy derives from the number of languages spoken combined with

the uses to which they are put and the socio-political connotations they bear

Baker and Stein (1977) scholars studying language use in Mauritius have

found that English is associated with knowledge French with culture

Creole with egalitarianism and other languages ancestral heritage

Consequently although Creole is the most widely spoken language in the

country French predominates in the media and English is the official

language of government and school instruction (Stein and Baker 1977)

According to the 1983 census the top five languages were Creole 541

Bhojpuri 204 Hindi 115 percen French 37 and Tamil 37 These

figures indicate the principal language used in the home Most Mauritians

however speak several languages

Literature suggests that global organizational structures need to adopt

common rules and procedures in order to have a common bdquolanguage‟ for

communicating across cultural borders (Kostova 1999 Kostova and Roth

2003 Gupta and Govindarajan 2000) This is directly reflected by the results

above that foreign investors need not to learn the local language of locals but

its important to create a common language within the organisation that is

59

understood by all stakeholders in the organisation for effective and efficient

communication

45 Religion

The study found that main religions in Mauritius are Hindu Muslim and

Christianity to a lesser extent Hindus make up approximately half of

religiously affiliated Mauritians Of the remaining Mauritians approximately a

third are Christians and about 15 Muslim followed by small Buddhist and

Sikh communities It is therefore imperative that a foreign investor considers

religion of the people of Mauritius before setting up a business Religion

The study also found out that various religions found on Mauritius tend to play

a major part in the islands cultural events and churches temples and

mosques are to be found everywhere Hindu and Tamil celebrations are part

of Mauritian cultural life

ldquohellipFestivals such as Divali (the festival of lights) Holi (in which participants

are covered in colourful powders) and Thai Poosam in which Tamil devotees

pierce their bodies with masses of needles as an act of penance are

popularly attended by Mauritianshelliprdquo [Participant A60]

ldquohelliphellipthere are also a number of diverse practices and superstitions

originating in beliefs brought from Africa and Asia Local sorcerers known as

longanistes or traiteurs are sometimes called in to settle arguments exact

revenge or administer love potionshelliphelliprdquo [Participant B41]

60

However all communities live together in harmony with each other regardless

of religion the study learnt

hellipHarmonious separatism is how we characterise our communal relations

in Mauritiushellip [Participant A13]

Since all citizens are ldquodescendants of slavery there are no tribes unlike

other African countries This has made integration and assimilation easier and

it makes it very easy for any SME to adapt to the local conditions due to pre

existing harmonyrdquohellip [Participant A13]

It is worth noting that businesses remain closed in public religious days but

the purchasing power remains the same regardless of whether it‟s a public

holiday or not

ldquohellipthe demand is not dependent on whether itrsquos a holiday or nothelliprdquo

[Participant A11]

ldquohellipit doesnrsquot matter really whether its holiday or religious holidayhelliprdquo

[Participant A21]

According to Stein and Baker (1977) the Mauritian society is noteworthy for

its high degree of religious tolerance Mauritians often share in the

observances of religious groups other than their own In part as a result of the

multiplicity of religions Mauritius has more than twenty national holidays In

addition the government grants subsidies to all major religious groups

61

according to their membership (Stein and Baker 1977)This is also evident

from the results of the research

Ethnicity religion and language have been important factors in shaping the

way Mauritians relate to each other in the political and social spheres Despite

the fact that sectarian factors are less of a determining factor in peoples

social and political behaviour they remain an important clue to the peoples

past and self-identity (Rassool 2001) As a foreign investor understanding

the religious belies of a society and taking all the necessary details in to

consideration play a major role in an international business environment

setting (Hosftede 1980) For example observing religious holiday and making

sure employees get days off and annual leaves on such important days

having prayer rooms for those willing to pray at work and creating a non-

discriminatory environment for all employees

It is worth mentioning that while religion does not have a direct impact on

Mauritius investment since it an international business hub However it is

important for investors to take note of all the aspects of religion since it plays a

very important role in lives of the Mauritians For example there are religious

holidays as an employer it is important to follow the religious holiday calendar

and give annual leaves to employees on such important days

46 Social Life

For the interest of prospective investors the study found that the social life in

Mauritius is very much close to families and friends People all meet at open

markets for normal shopping and socialise over weekends ldquoeven ministers

62

managing directors of big companies go to open marketsrdquo [Participant

A12]

There is no busy night life in the country as well as cinema and theatres

because most people prefer home video entertainment ldquoMost people found at

social places like cinemas pubs clubs etc are employees and not

employersrdquohelliphellip [Participant A12] Prospective investors should therefore

know that they are likely to meet business associates at board rooms or at

their offices rather than at social centres

In a society where tolerance is a national virtue and ethnic conflicts are

invisible to the casual visitor it takes time to learn the dos and donts of

socialising ldquohelliphere in Mauritius you must realize that we walk on eggs

continuouslyhelliprdquo [Participant B36] For a peaceful and tolerant as Mauritius

undoubtedly is the diverse groups populating the island do not collectively

make up a nation Mauritius like any other island is a nation of nations and

compromise is the order of the day be it in politics in the economy in the

media or at a dinner party the study found

The study found out that unlike other African societies Mauritius people would

prefer to stay at home and watch movies play video games with kids or visit

friends and relatives to socialise or for a night out There are not many social

night clubs in Mauritius as compared to the United Kingdom ldquohellipmany homes

today have a Digital Video Decoders (DVD) sets and donrsquot see the importance

of going out to cinemas and would helliphelliphelliprdquo [Participant A12]

63

This does not come as a surprise since literature suggests that Mauritius

though it is multicultural society and an international hub for business there

are a quiet peaceful and tolerant nation and would prefer to keep their space

(Stein and Baker 1977)

47 Market Accessibility

The study found that as first foreign investor Mauritius government has open

market programme When the free operational zone initiative began investors

imported raw materials imported duty free and foreign companies had to

show transformation of raw materials into fished exports since the

government‟s aim was to increase exports thus improve balance of trade

However in the early stages the initiative did not work as expected because

of certain barriers

Lack of adequate government incentives to lure more investors

Too much repetition meaning most of the companies where doing the

same thing

Lack of skilled human resources

The scenario is summarised by participant B3 in the following

statementldquohelliphellipour people did not have culture of businessrdquo

For more access to the markets further initiatives were put into place The

government assured investors of freedom of capital movement that is the

investors were guaranteed that they would bring their money into and out of

the country whenever they felt like doing so In addition the government

64

embarked on providing more facilities (industrial buildings) and infrastructures

all over the country opening up rural areas because towns already had

infrastructures Lastly first time investors were provided with free access to

customs thus maintaining the earlier option of tax free imports

While Mauritius was doing all these events elsewhere in the world played to

their favour European Union and USA were imposing import quotas on

Chinese and Indian imports to prevent damping So these investors had to

look for alternative markets and Mauritius turned out to be one of such

markets But the government had to act quickly to avoid bdquotransit investors‟

ldquohellipthey are investors who want to do business when it favours them but when

they begin to loose certain privileges or profits get diminished then they take

offrdquohelliphellip [Participant B3]

To avoid this foreign investors were made to transfer skills and knowledge to

local community which led to emergence of Mauritius community of

manufacturing

ldquowho started from easy stitching like socks pyjamas bras etc and later

upgraded to big Mauritius labelshelliprdquo [Participant B3]

The study further found that the initiative did not stop there The government

further established Mauritius Enterprise Development Investment Authority

(MEDIA) in 1985 which took lead in looking for prospective investors from

65

Europe USA Hong Kong and India among others Any willing investor was

transported to Mauritius and accommodated freely on government accounts to

tour the country and carry out investment feasibility studies This helped to

popularise the investment opportunities in Mauritius and attracted many more

investors Currently MEDIA has been transformed into Mauritius Board of

Investment which is no longer in charge of managing industries but

ldquopromotes Mauritius businesses abroad and participates in trade fairs to

further open uprdquo [participant B3]

The study also found out that there are specific niche markets for foreign

investment in Mauritius namely the Offshore Industry the Financial Industry

the Construction and Tourism especially in the area of high class luxury

property market in form of villas hotels and apartments and of recent the

Information Technology (IT) industry These industries cover a large spectrum

including SMEs

ldquohellipone of these sectors makes a very good investment for any investor

especially the construction industryhelliprdquo [Participant A89]

The results agree with Putz (2000) which notes that niche markets make

establishing a business by immigrants easier because the immigrants needs

for consumer goods create a specific demand This is evidence by all the

incentive the Mauritian government have put in order to attract foreign

investors in to country for the benefit of the Mauritian population Furthermore

Putz (2000) emphasise the opportunities offered by the host country including

66

access to the market and job market conditions as important factors for

international business

48 The role of ICT to SME business in Mauritius

The study found that Mauritius has a very well established ICT sector It has

formed the backbone of SME success in Mauritius As early as 1990 the

country provided hellip ldquothe fastest broadband in the world to help SME business

investors who were each allocated free 2MB internet accessrdquohellip[Participant

A 23] Recently the government has in turn invested a lot of money in

developing a cyber city a few kilometres away from the capital Port Louis

which will form the hub for future investments

This high level of ICT development in the country has created SME in areas

such as offshore financial services calls centres and enhanced tourism

industry growth Any prospective investors are guaranteed of highly

developed ICT backed up by highly qualified local human resources The

offshore investment sector has even been further boosted byhellipldquobilateral

agreements with India allowing companies registered in Mauritius to transfer

funds to India tax freerdquohellip[participant B13]

It is hoped that in helliprdquo5 years time the whole island will have free wifi

connectivityrdquo participant B33 The country not only makes use of its advanced

ICT sector but has become a big player in the region as well For example

Mauritius state informatics computerised South African government in 1996 It

has also won other computerisation contracts in Zambia Zimbabwe Namibia

Kenya and Ghana To sustain such success ldquopartnerships have been formed

67

with global players such as Microsoft to provide training not just to Mauritius

nationals but other scholars from the South Eastern Africa region as

wellrdquohellip[participant B13]As matter of fact the government of Mauritius has

invested billions in building s cyber-city a few miles aware from the capital

Port Louis

ldquoits opening in July this year and it is expected to be the centre of attraction

for investorsrdquo [Participant B13]

ldquoactually the government invested in this cyber-city with the intention to

attract European and American investorsrdquo [Participant A6]

From these results there is evidence that technology plays a major role in

SME development Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

68

48 Governance and the role of women in SME sector

in Mauritius

Mauritius is a multicultural country with ldquo70 of the population of Chinese

Indian ancestry 2 white French origin and the remaining mixed race ndash

creolesrdquo [participant A17] Europe has not have a lot if cultural influence on the

country and predominant cultures are Asian African cultures Study found

that common folklore popular songs in Mauritius would also be ordinary

found on other African countries such as Senegal Mozambique Cameroon

and Sierra Leone among others signifying deep rooted African traditions

The government maintains ndash discrimination laws for either gender In the early

stages of SME development women provided the bulk of the labour in the

rural areas as industries moved away from cities into the rural areas There

are concerted efforts to get women into jobs especially leadership roles

ldquowomen themselves are too slow to act and take advantage of the

government incentivesrdquo

The study found out that woman in Mauritius do not occupy positions of

strategic power decision making This is not a surprise because it is the same

with most Southern African countries The government of Mauritius has put a

lot of structures to support women in business but women are taking it slow to

utilize these structures

69

There are many government agencies and organizations headed by women

and even cabinet posts but most women would rather stay out of politics

becausehelliphellipldquopolitics can get very dirty involving personal lives of politicians

which men donrsquot mind but women do mind a lot aboutrdquohellip[participant A 17)

However in other sectors like education and healthcare there are many

women represented in the labour force

The study also found out that just like any other society one can not ldquohellipstop

some kind of abuse for both males and females There are cases of both

female and male harassment but the law comes in to protect such victims

There are also cases of petty crime and rape involving women either as

perpetrators or victimsrdquohellip [Participant A13]

According to AllAfrica Global Media (2008) the winds of change are blowing

across the island of Mauritius and many men in this traditionally conservative

nation are working hand in hand with women to see that the common sense of

gender equality prevails The absence of women at the decision-making table

usually means the absence of their priorities and needs Irrespective of the

Southern African Develoment Community (SADC) Declaration there are so

few women in politics This is evident from the results of the study which found

that women will rather do health jobs and education than to play the dirty

tricks of politics

Women councillors make up a mere 37 in the Moka-Flacq District Council

This is the lowest figure not only in Mauritius but also in the SADC region

70

This is far from the 2005 30 target not to mention the 50 goal now being

set for the region and included the draft Protocol on Gender and Development

up for review at the August SADC Heads of State Summit ( AllAfrica Global

Media 2008)The results found out that there is also a few representations of

women in business Women do mostly the dirty jobs of caring for children and

their families and do not have the courage to enter the business sector This is

not surprising especially in the SADC region women play the minority role

and are rarely represented at the strategic decision making level hence their

needs are always neglected resulting in women poverty

49 Challenges faced by the country and hence SME investors

Stiff competition from other countries such ashelliphellipldquoBotswana Vietnam and

South East Asia in the textile industry due to cheap labour Maldives and the

Caribbean Islands for tourism difficult in Training enough qualified personnel

in ICT to cope with demand International competition and access to fundsrdquo

hellip[participant B13]

To face these challenges the study found that the country has expanded

tertiary education and formed partnerships with foreign universities such as

ldquoFrench Scientific University which has been running Medical school in

Mauritius for 10 years By the time of this study an agreement had been

reached by Thames valley university (UK) to open up campus in

Mauritiusrdquohellip[participant B15] The aim of the government is to offer high

quality education to students from the region as well as far away like China at

affordable cost and to compete with European universities Further to

71

educational development the study also found out that the country is striving

to create partnerships with ldquoresearch organisations and to create high quality

healthcare so as to benefit from health tourism where would just travel to the

country to get affordable high quality specialised health carerdquohelliphellip [Participant

A3]

Finally results show that there is stiff competition from different sectors of

business and other force which needs to be taken into consideration when

doing business internationally Globalization tends to redistribute economic

rewards in a non-uniform manner a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) It essential to know all

the factors surrounding the business sector and understanding all the

business practices before investing to avoid any loss

72

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

Research on culture and IB is definitely a bdquogrowth‟ area because the business

world is in many ways becoming one The researcher concluded the following

based on study findings

Firstly the cultural diversity and harmony of the island make Mauritius a

unique place in the world It is also known for its social peace political stability

and racial harmony Its steady economic growth over the years coupled with

its nation‟s social cohesion and prosperity ensure continuing development

Secondly Mauritius enjoys a literacy rate over 80 percent Skilled labour

graduates and qualified professional including lawyers engineers IT

programmers consultants accountants and chartered secretaries are

available to suit virtually all business needs in two international languages

English and French Language is therefore not a barrier to foreign investment

In addition academic training at the University of Mauritius and the newly

established University of Technology a comprehensive system of vocational

training through the Industrial and Vocational Training Board (IVTB) ensures a

ready supply of skills in a number of fields such as tourism engineering

electronics jewellery ICT printing and textiles

Thirdly In view of the importance of foreign investment as a source of

sustenance to economic growth the government of Mauritius has taken a

series of policy measures to encourage its flows into manufacturing offshore

73

banking and financial services information technology communication and

tourism As far as foreign investors are concerned Mauritius offers itself as an

attractive destination because several positive features such as political

stability availability of skilled labour and investment-friendly rules and

institutions

Fourthly after a sustained growth path over the last three decades based on

sugar textiles and tourism Mauritius is now shifting gears to move towards a

higher stage of economic development so as to consolidate its position as a

premier international hub Foreign Direct Investment (FDI) has played an

important role in the development of Mauritius and will again be decisive when

the country embarks on high value-added capital intensive and knowledge-

based activities

Fifthly the government plays the role of a facilitator and has endeavoured at

all times to create the most conducive investment environment by enacting

appropriate legislations building state-of-the-art infrastructure investing in

human capital and introducing packages of investment incentives for the

manufacturing financial services and ICT sectors so as to enhance the image

of Mauritius

In this respect the Board of Investment (BOI) is the first contact point for

anyone investing in Mauritius Operating under the aegis of the Ministry of

Finance the BOI was established in March 2001 under the Investment

74

Promotion Act to give a new impetus to foreign direct investment The BOI is

the apex organization for the promotion and facilitation of investment in

Mauritius The primary role of BOI is to stimulate the development expansion

and growth of the economy by promoting Mauritius as a competing business

and service centre It aims at streamlining the legal framework and to make

better provision for the promotion and facilitation of investments in Mauritius It

acts as a facilitator and provides a one-stop shop service to both local and

foreign investors ensuring reliable and speedy processing of applications The

BOI receives processes and approves all applications for investing in

Mauritius It also assists investors in obtaining the necessary secondary

permits and clearances from relevant authorities thus ensuring a speedy

implementation project

Six Mauritius pursues a liberal investment policy and actively encourages

foreign direct investment in all sectors of the economy Attractive packages of

both fiscal and non-fiscal incentives tailor-made to the needs of each priority

area of development are offered to investors Excellent opportunities for

investment in Mauritius exist in various sectors of the economy including

manufacturing information technology knowledge industry regional

headquarters tourism and leisure financial services Freeport activities

amongst other sectors Some of the priority areas are in Information and

Communication Technology which is set to a play a lead role in the economic

development of the country in the medium and long terms The availability of

high bandwidth connectivity (with SAFE Project and international Gateways)

at near global parity in quality and tariff on the one hand and the setting up of

75

dedicated IT habitats including the Cyber city at Ebeacutene on the other hand

plus total Government support to this industry are testimony of the importance

of this industry to Mauritius Others include the manufacturing sector textiles

and apparel the spinning sector electronics and light engineering medicals

and pharmaceuticals agro-business leather products and jewellery and

watches

The export-oriented manufacturing sector has been the backbone of the

Mauritian economy for the past three decades This sector remains a major

constituent of the Mauritian economy in terms of foreign exchange earnings

employment and contribution to GDP and is called upon to continue to play

an important role in the consolidation and diversification of the industrial base

of the country certain

Lastly some incentives provided by government to foreign investors In the

manufacturing sector these include among others

No customs or duty or sales tax on raw materials and equipment

No tax on dividends

No capital gains tax

Free repatriation of profits dividends and capital

50 relief on personal income tax for expatriate staff

New incentives for the ICT Sector consist inter alia of

the availability of tax holiday up to year 2008 for specified

pioneering high-skills ICT operators typically geared towards the

export market such as software development multi-media and to

high-level ICT training institutions

76

customs duty-free import of ICT and similar equipment

50 relief of personal income tax for a specified number of foreign IT

staff

duty-free import of personal belongings of foreign IT staff

effective fast track procedure for procession of visa and work

permits for foreign staff including spouses

From the above the research concludes that Mauritius being a multicultural

society as it is the culture they share does not have a direct impact on

investment in Mauritius because of it is an international hub for business It is

also expected that from the results the situation is not going to change after

time but will keep in this shape for a long since it is the government incentive

to attract more investors into the country However there are certain aspect of

culture eg believes that foreign investors need to understand and take into

consideration This study recommends any prospective investor to make good

investment in to Mauritius without fear

77

CHAPTER SIX

REFLECTIONS FROM THE STUDY

The views derived from this study might not be directly applicable to the whole

region because of variations in socioeconomic settings in various parts of the

Mauritius Also views expressed in this study were obtained mainly from

urban based managers and respondents and might not be similar to rural

based SMEs from the same community or area

Some scholars might not support the sampling techniques used but they

were the most practicable given the circumstances

Legal practitioners in Mauritius were supposed to be part of the sample but

they were hard to reach with some declining to participate

Demographically and geographically the sites were larger than anticipated

given the time and resources available for the study

Lastly the study was limited to the previous 20 years which might have

yielded same generational trend missing the opportunity to get data across

various generations within the sites

78

CHAPTER SEVEN

FUTURE RESEARCH

With more funding and resources a similar study could be conducted

throughout a wider geographic region and encompassing all categories of

SMEs micro small and medium Furthermore with more time a greater

number of interviews could be conducted which would provide richer data that

would be more in depth for conclusive analyses to be made Additionally

participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

79

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

WORD COUNT 16 969

80

APPENDICES APPENDIX 1 MauritiusData Profile

2000 2005 2006

World view

Population total (millions) 119 124 125

Population growth (annual ) 10 08 08

Surface area (sq km) (thousands) 20 20 20

Poverty headcount ratio at national poverty line ( of population)

GNI Atlas method (current US$) (billions) 444 653 681

GNI per capita Atlas method (current US$) 3740 5250 5430

GNI PPP (current international $) (billions) 891 1239 1334

GNI per capita PPP (current international $) 7510 9970 10640

People

Income share held by lowest 20

Life expectancy at birth total (years) 72 73 73

Fertility rate total (births per woman) 20 20 20

Adolescent fertility rate (births per 1000 women ages 15-19) 39 40 41

Contraceptive prevalence ( of women ages 15-49)

Births attended by skilled health staff ( of total) 100 99

Mortality rate under-5 (per 1000) 18 15 14

Malnutrition prevalence weight for age ( of children under 5)

Immunization measles ( of children ages 12-23 months) 84 98 99

Primary completion rate total ( of relevant age group) 105 97 92

Ratio of girls to boys in primary and secondary education () 98 100 103

Prevalence of HIV total ( of population ages 15-49) 06

Environment

Forest area (sq km) (thousands) 04 04

Agricultural land ( of land area) 557 557

Annual freshwater withdrawals total ( of internal resources)

Improved water source ( of population with access) 100

Improved sanitation facilities urban ( of urban population with access) 95

Energy use (kg of oil equivalent per capita)

CO2 emissions (metric tons per capita) 23

Electric power consumption (kWh per capita)

Economy

GDP (current US$) (billions) 447 629 635

GDP growth (annual ) 40 46 35

Inflation GDP deflator (annual ) 37 48 41

Agriculture value added ( of GDP) 6 6 6

Industry value added ( of GDP) 31 28 27

Services etc value added ( of GDP) 63 66 68

Exports of goods and services ( of GDP) 63 57 60

Imports of goods and services ( of GDP) 65 61 67

Gross capital formation ( of GDP) 26 23 25

Revenue excluding grants ( of GDP) 220 214 215

Cash surplusdeficit ( of GDP) -11 -21 -30

States and markets

Time required to start a business (days) 46 46

Market capitalization of listed companies ( of GDP) 298 416 567

Military expenditure ( of GDP) 02 02

Fixed line and mobile phone subscribers (per 100 people) 39 82 90

Internet users (per 100 people) 73 241 145

Roads paved ( of total roads) 97

High-technology exports ( of manufactured exports) 1 2 24

Global links

Merchandise trade ( of GDP) 82 84 91

Net barter terms of trade (2000 = 100) 100 109 115

External debt total (DOD current US$) (millions) 1713 2153 1997

Short-term debt outstanding (DOD current US$) (millions) 767 1363 1363

Total debt service ( of exports of goods services and income) 181 72 71

Foreign direct investment net inflows (BoP current US$) (millions) 266 39 107

Workers remittances and compensation of employees received (US$) (millions)

177 215 215

Official development assistance and official aid (current US$) (millions) 20 34 19

Source World Development Indicators database April 2008

81

APPENDIX 2

SUMMARY GENDER PROFILE (Mauritius)

Mauritius

Sub-Saharan Africa

Upper middle income

1980 1990 2000 2004 1980 2004 1980 2004

GNP per capita (US$) 1210 2300 3690 4640 652 601 2391 4769

Population

Total (millions) 10 11 12 12 3850 7258 4394 5762

Female ( of total) 507 501 502 503 503 501 515 514

Life expectancy at birth (years)

Male 63 66 68 69 47 46 63 66

Female 69 73 75 76 50 47 71 73

Adult literacy rate ( of people aged 15+)

Male 848 884 954

Female 750 805 942

LABOR FORCE PARTICIPATION

Total labor force (millions) 0 0 1 1 157 299 193 256

Labor force female ( of total labor force)

37 34 34 35 43 42 42 41

Unemployment

Total ( of total labor force)

33 88 102 12

Female ( of female labor force)

36 96 126 134

EDUCATION ACCESS AND ATTAINMENT

Net primary school enrollment rate

Male 91 96 94 68

Female 92 97 96 60

Progression to grade 5 ( of cohort)

Male 97 99

Female 98 99

Primary completion rates ( of relevant age group)

Male 61 105 98 66 95

Female 63 104 102 56 96

Youth literacy Rate ( of people aged 15-24)

Male 912 937 978

Female 911 954 974

HEALTH

Total fertility rate (births per woman)

27 23 20 20 67 53 31 20

Contraceptive prevalence ( of women aged 15-49)

75 26 76 22 69

95

82

APPENDIX 3

DATA COLLECTION FORM FOR THE SURVEY Sitehelliphelliphelliphelliphellip Participant numberhelliphelliphelliphellip MANAGING DIRECTOR CEO MANAGER

Age group -25 26 ndash 35 36 - 45 46-55 56-64 65+

Education Nursery ndash Standard 4

Std 5 ndash 7 (8) Form 1 ndash 2

Form 3 ndash 4 or A level

College University

Employment Yes No Business (what type)

Partnership Whole Citizen

Joint Venture

Age of Company

1-3 years 4-6 years 7-10 years

11-15 Above 15yrs

Number of Employees

10-25 50-99 100-149 150-200

Place of birth

In the constituency

Outside the constituency

Where

Residence Rural Urban Where

Before starting business

After business

Children

Boys Number

Girls Number

Any born a Yes None

Are they in school

Yes No Some

Working Yes No Some

Annual Sales

Balance Sheet

Less than R1000000

R101 000- 250 000

R251 000- 15 million

R 15 million +

Years Employed as CEO

0-3 4-7 8-14 15-19 Over 20 years

83

APPENDIX 4 Qualitative data questionnaire The following questions were used as a guide during the focus group discussions However they were not followed in the strict order or wording as they appear here

SOCIAL INCLUSION EXCLUSION

I am going to ask you questions regarding support you think the society could give foreign investors There is no right or wrong answers it is just about your opinion

a) How do you feel about foreign investors coming to Mauritius

b) How has your friendship with foreign business before and after they arrive in Mauritius

c) Do you keep in touch with foreign businesses around you and prospective investors

d) In your opinion how does foreign business feel about Mauritius

e) Are foreign businesses doing well or badly

f) What support structures or government incentives are there for foreign investors

g) What kind of support would you like to receive from the government

BUSINESS ATTITUDE AND BELIEFS

I am now going to ask you some general questions about business and your opinions about it

a) How would you describe the general business environment

b) Do you find it difficult to do business with people from different countries of the world Why

c) What do you believe the first thing to do on the morning before opening

your business (Local people) Why

d) How best can the Mauritius people be motivated into business How do you get over them

84

e) What areas do local people consider as niche areas for foreign

business

f) How do local people organize their business Why

g) As a local business person what would you consider as abomination of business in Mauritius Why

h) What is the role of women in the business sector

CULTURE

I am now going to ask you questions about the your culture

a) What are your views about business culture in Port Louis

b) What are the challenges of national culture on business practices in your opinion

c) What are the benefits of culture on business practice

d) Do you think foreign investors need to know the local language when investing in Mauritius

e) If you were to advice a foreign investor what would you want them to know about Mauritius

f) How do you think the family daily practice influences business in

Mauritius

g) What business actions of behaviors are sensitive to the local people

h) How best can foreign investors assimilate with the local business people

i) What do local people like to buy on weekends week days public religious holidays

j) What marketing strategies violet the culture of Mauritius ndashwomen naked Eating behavior Etc

85

APPENDIX 5

Introductory letter consent form

TITLE CULTURE AND INTERNATIONAL BUSINESS

ENTREPRENUERSHIP A CASE STUDY OF MAURITIUS

INTRODUCTION

I am Angelinah Boniface a student pursuing Masters of Science in

Information Systems the University of Sheffield United Kingdom I am

conducting a study on the Impact of culture on small and medium

enterprises for my dissertation The study is expected to last 3 months and a

report of the findings will be availed to all interested stakeholders including the

university as part of course requirements

PURPOSE OF THE STUDY

This study is intended to gain insight into views and opinions about

widowhood and inheritance in relation to health and well being of participants

and the community at large Evidence from this study may be useful in future

government and development agencies‟ planning and provision of relevant

interventions for the benefit of the whole community

VOLUNTARINESS AND CONFIDENTIALITY

Your participation in this study is purely voluntary and you can withdraw

at any time should you feel uncomfortable to proceed Information obtained

from this study will be used for no any other purpose other than the

dissertation It will be kept confidential only accessible to the researcher and

pseudonyms will be used to ensure anonymity and confidentiality of

participants and location The researcher will strive to treat all participants

with dignity respect equality and minimise possible harm that might arise

from the study

Agreeing to take part in this study will be treated as your consent to be

involved in this research BUT YOU HAVE THE RIGHT TO WITHDRAW

THE CONSENT

86

RISKS AND BENEFITS

There are no risks to the questions that will be asked If at any point you feel

uncomfortable to answer any question please feel free to ignore such to avoid

any harm

There is likely to be no immediate benefits to you as a participant However

the information obtained in this study will go a long way in informing the

younger generation and wider audience about the culture It might also be

used by the government and other development agencies to plan for

interventions relevant to the needs of widows in your community in the future

based on the evidence you have provided in this study

CONTACTS

The researcher can be contacted at +44 0791263163 lip07acbshefacuk

or linabonyahoocom in case of any questions issues

In case of any problems that need university attention my supervisor can be

contacted at kalbrightshefacuk

PLEASE DONrsquoT TAKE PART IN THIS STUDY IF YOU ARE BELOW 18

YEARS OF AGE

Thank you very much for your anticipated cooperation

Researcher‟s signature Participant‟s signature

helliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

87

REFERENCES

Bhagat RSet al (2002) Cultural variations in the cross-border transfer of

organizational knowledge an integrative framework Academy of

Management Review 27(2) 204ndash221

Boyacigiller NA amp Adler NJ (1991) ldquoThe parochial dinosaur organizational

science in a global contextrdquo Academy of Management Review 16(2) 262ndash

290

Bowling A (ed) (2002) Research methods in health Investigating health and

health services Buckingham Open University press

Dabee R and Greenway D (2001)The Mauritian Economy A Reader

PalgraveNew York

Dawson C D (2002) Practical research methods A user friendly guide to

mastering research techniques and projects Oxford How to Books Ltd

Denscombe M (ed) (2007) The good research guide for small scale social

research projects Berkshire Open University Press

Denscombe M(ed) (2003) The good research guide For small scale social

research projects Maidenhead Open University Press

Economic And Social Research Council (2005) ESRC research ethics

framework [online]

httpwwwesrcsocietytodayacukESRCInfoCentreopportunitiesresearch5

Fethics5Fframework [ Accessed May 05 2008]

88

Gilbert N (ed) (2001) Researching social life London Sage Publishers

Grbich C (1999) Qualitative research in health An introduction London

Sage publications

Hunter D amp Lang T (1993) The Leeds declaration Leeds Nuffield Institute

for Health

Neuman L W(ed) (2000) Social research methods qualitative and

quantitative approaches Needham Heights MA Allyn amp Bacon

Maynard M amp Purvis J (1994) Researching womens lives from a feminist

perspective London Taylor and Francis group

Muuka GN (2002) Africas informal sector matters a challenge to scholars

to close the knowledge gap Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

Business and Development International Conference Port Elizabeth April 3-

6 pp1-6

Southwood R (2004)The impact of ICT on SMEs ndash a motor for future

economic growth in hard-pressed times [Online] Balancing Act news update

wwwbalancingact-africacomnewscurrent1html [Accessed 26 January

2008]

Machacha L (2002) Impact of information technology on small and medium

enterprises (SMEs) in Botswana Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

89

Business and Development International Conference Port Elizabeth April 3-

6 pp277-82

Organisation for Economic Co-operation and Development (OECD)

(2000)OECD study highlights role of small and medium enterprises in job

creation Organisation for Economic Co-operation and Development

[Online]wwwoecdorgmediapublishpb00-11ahtm [Accessed 8 July 2008]

Commonwealth Secretariat UK (2006) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius London Commonwealth

Secretariat

Reed DM (1998) Using the Business Excellence Model in Small Service

Business British Quality Foundation

Taylor AW amp Adair RG (1994) ldquoEvolution of Quality awards and self

assessment practices in Europe a case for considering organisation sizerdquo

Total quality Management 5 (4) 227-237

United Nations (1993) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

Johanson J amp Wiedersheim-Paul F (1995) The Internationalization of the

Firm - Four Swedish Cases Journal of Management Studies 20 (3) 123-139

90

Chui ACW Lloyd AE and Kwok CCY (2002) The determination of

capital structure is national culture a missing piece to the puzzlerdquo Journal of

International Business Studies 33(1) 99ndash127

Earley PC amp Gibson CB (2002) Multinational Teams A New Perspective

Lawrence Earlbaum and Associates Mahwah NJ

Gibson CB (1999) ldquoDo they do what they believe they can Group-efficacy

beliefs and group performance across tasks and culturesrdquo Academy of

Management Journal 42(2) 138ndash152

Hofstede G (1980) Cultures Consequences International Differences in

Work-Related Values Sage Newbury Park CA

SMIDO (2006)A new Vision For SMEs Development Mauritius

Government Printer Port Louis

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Stone A (1997) SMEs and Technology why should we make special efforts

to help World Bank

Bhagat RS et al (2003) Knowledge in Cross-Cultural Management in Era

of Globalization Where Do we Go from Here in D Tjosvold and K Leung

91

(eds) Cross-Cultural Management Foundations and Future Ashgate Englan

155ndash176

Cairncross F (2001) The Death of Distance Harvard Business School Press

Boston MA

Commonwealth Secretariat UK (2005) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius Commonwealth Secretariat

Drucker PF (1995) Managing in a Time of Great Change Truman Talley

BooksDutton New York

Guilleacuten M (2001) ldquoIs globalization civilizing destructive or feeble A critique

of five key debates in the social science literaturerdquo Annual Review of

Sociology 27 235ndash260

Gibson CB and Cohen SG (2003) Virtual Teams that Work Creating

Conditions for Virtual Team Effectiveness Jossey-Bass San Francisco

Grazol P et al(2004) ldquoThe Effect of Culture on IT Diffusion Email and Fax in

Japan and the US Information Systems Researchrdquo Journal of International

Consumer Marketing 16 4 pp 29-64

Greider W (1997) One World Ready or Not Crown Business New York

92

Gertler MS (1997) The Invention of Regional Culture In Lee R and Willis J

eds Geographies of Economies London Arnold

Govindarajan V and Gupta AK (2001) The Quest for Global Dominance

Transforming Global Presence into Global Competitive Advantage Jossey-

Bass San Francisco

Haire M et al(1966)Managerial Thinking An International Study Wiley

New York

Heuer M et al(1999) Cultural stability or change among managers in

Indonesia Journal of International Business Studies 30(3) 599ndash610

Hofstede G (1997) Cultures and Organizations Software of the Mind New

York McGraw-Hill

Hofstede GH (2001) Cultures Consequences Comparing Values

Behaviors Institutions and Organizations Across Nations London Sage

Publications

Hoecklin L (1995)Embedded Autonomy States and Industrial

Transformation Princeton NJ Princeton University Press

93

IBP USA (2002) Mauritius Investment and Business Guide IB Tauris and Co

LTD London

Kerr C et al (1960) Industrialism and Industrial Man Harvard University

Press Cambridge MA

Kirkman BL amp Shapiro DL (2000) ldquoUnderstanding why team members

won‟t share an examination of factors related to employee receptivity to team-

based rewardsrdquo Small Group Research 31(2) 175ndash209

Lisenda L (2003) Small and medium-scale enterprises in Botswana their

characteristics sources of finance and problems BIDPA Gaborone

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Meredith GG (ed) (2004) Small Business Management in Australia

McGraw-Hill Sydney

Mistry PS (1999) ldquoCommentary Mauritius ndash quo vadisrdquo African Affairs 98

(393) 551ndash69

Mullins LJ(ed) (1999) Management and Organizational Behavior 5th ed

London Financial Times Pitman

94

Myers MDamp Tan FB (2002) ldquoBeyond Models of National Culture in

Information Systems Researchrdquo Journal of Global Information Management

10 (1) 112-134

Putz R (2000) ldquoCulture and entrepreneurship views from the middle and

lower level managersrdquo Journal of Business Ethics 22 145- 153

Scottish Economic Statistics Scottish ExecutiveONS IDBR (2005)Size

Analysis of Welsh Business SDR 692004Statistical Press Release URN

0440

Straub D et al (2002) rdquoTowards A Theory-Based Measurement of Culture

Journal of Global Information managementrdquo 10 (1)

Schaeffer RK (2003) Understanding Globalization The Social

Consequences of Political Economic and Environmental Change Rowman amp

Littlefield Lanham MD

SMIDOA new Vision For SMEs Development(May 1996)

SMME Task Force Report (1998) Small medium and micro-enterprises task

fore force report Government Printer Ministry of Commerce and Industry

Sondergaard M amp Hofstede G (1994) ldquoA study of Reviews Citations and

Replicationsrdquo Organization Studies 15 (3) 447-456

95

Schein EH (1992) Organizational Culture and Leadership Jossey-Bass

San Francisco

Stone A ( 1997) SMEs and Technology why should we make special efforts

to help (World Bank 1997)

Statistical Press Release (2005) URN 0592 Office for National Statistics

Weisinger JYamp Trauth EM (2002) ldquoSituating Culture in the Global

Information Sectorrdquo Information Technology amp People 15 (4) 306-320

United Nations (2005) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

2

In this new millennium few executives can afford to turn a blind eye to global

business opportunities Japanese auto-executives monitor carefully what their

European and Korean competitors are up to in getting a bigger slice of the

Chinese auto-market Executives of Hollywood movie studios need to weigh

the appeal of an expensive movie in Europe and Asia as much as in the US

before a firm commitment The globalizing wind has broadened the mindsets

of executives extended the geographical reach of firms and nudged

international business (IB) research into some new trajectories

However research shows that as markets competition and organisations

globalise the business people businesses themselves and consumers

involved in these institutions increasingly have to interact manage negotiate

and compromise with people from different cultures (Hofstede 1997

Hoecklin 1995) Global business managers report that when doing business

overseas challenges mount For example structural conditions physical

social and economic arrangements can affect business operations and

outcomes as can the varied norms and behaviours that come with different

national cultures

One such new trajectory is the concern with national culture Whereas

traditional IB research has been concerned with economiclegal issues and

organizational forms and structures the importance of national culture

broadly defined as values beliefs norms and behavioral patterns of a

national group (Hofstede1980) has become increasingly important in the last

two decades largely as a result of the classic work of Hofstede (1980)

3

National culture has been shown to impact on major business activities from

capital structure (Chui et al 2002) to group performance (Gibson 1999) For

reviews see Boyacigiller and Adler (1991) and Earley and Gibson (2002)

Weisinger and Trauth (2003) report that culture evolves and takes unique

forms in local offices of organizations This means that culture is both dynamic

and situated in its local context Thus external conditions both structural and

cultural can influence global business Yet small and medium enterprise

(SMEs) managers can have an impact on how their organizations‟ cultures

evolve Therefore strategic leaders need to introduce unique norms values

and processes that fit together coherently in successful organizations

Therefore the main purpose of this case study is to explore and understand

the Small Medium Enterprise (SMEs) business environment in Mauritius and

how SMEs can penetrate the business culture there

The purpose of this paper is therefore to explore and understand how national

culture influences international business decisions and how to culture affects

international business investment using Mauritius as a case study

In this chapter the author outlines the background of the study specifies the

study objectives describes the significance of the study gives methodological

overview and finishes off by outlining definitions of key terminologies

4

11 Background to the Study

Strategically located in the Indian Ocean at the crossroads of Africa and Asia

Mauritius is reputed for its beautiful countryside and its 150 kilometres of white

sandy beaches and transparent lagoon A British colony that gained

independence in 1968 officially known as Republic of Mauritius the country is

positioned to the east of the Madagascar Islands The geographical

coordinates of the nation are 20ordm17 South latitude and 57ordm33 East longitude

The total area covered by the island nation is 2040 square kilometres

Mauritius enjoys a maritime sub-tropical climate and is therefore an all-year-

round holiday destination From a monocrop economy depending mainly on

sugar it has diversified its economic activities into textile and apparel

industry tourism and financial service Mauritius has witnessed a massive

development in the last decades (SMIDO 2006)

5

Figure 1 Map of Mauritius showing all Provinces

Source Encarta World atlas online

6

Figure 2 Mauritius map showing political divisions of the country

Source Maps of the world online

The research area was around the capital city Port Louis marked in red For

anonymity the site was just called A or B Administratively Mauritius is divided

into nine Provinces (figure 2)

The country is remarkable in its ethnic diversity It forms a unique mosaic of

immigrants from the Indian sub-continent Africa Europe and China The

cultural diversity and harmony of the island make Mauritius a unique place in

the world The various religions found on Mauritius tend to play a major part in

7

the islands cultural events and churches temples and mosques are to be

found everywhere Hindus make up approximately half of religiously affiliated

Mauritians followed by Muslims and Christianity as the minority It is also

known for its social peace political stability and racial harmony Its steady

economic growth over the years coupled with its nation‟s social cohesion and

prosperity ensure continuing development (Country Profile 2005)

The country is equipped with a highly skilled labour force to suit virtually all

business in two international languages English and French and a very good

infrastructure thereby attracting Foreign Direct Investment The average

economic growth was 56 over the last 3 years The income per Capita has

reached 4000 US Dollars As a result the standard of living has gone up The

country has now a life expectancy rate of 714yrs an adult literacy rate of 83

(Country Profile 2005)

To face globalisation and a new economic environment the Government has

taken several steps High value-added capital intensive and knowledge-

based activities are on the priority list The Information Technology sector is

undergoing rapid changes so as to be fit for the next millennium The aim is to

make Mauritius a centre for high-tech and software services which can be

exported (Commonwealth Secretariat 2006)

8

12 An Overview of Mauritian Economy

The economy of Mauritius has experienced major structural transformation

over the last two decades The country has moved away from a mono-crop

economy with fast population growth high unemployment and low per capita

income to one that is more dynamic and diversified The sources of

diversification have been agriculture export manufacturing (mainly textile)

tourism and more recently international services with Offshore and Freeport

activities (Country profile 2005)

To respond to the global competition in these sectors Mauritius has made

extensive use of modern technology to improve its productivity and efficiency

The real growth rates have been around 54 over the past four years and

Mauritius is now classified as a middle-income country and is one of the

healthiest economies in the whole African region (Country profile 2005) The

sugar sector provided the start-up capital for the Export Processing Zones

(EPZ) The rapid rate of growth of investment in the manufacturing sector

(investment grew by over 30 each year from 1983 until the late 1990s in this

sector) that led to the success of the EPZ and the Mauritian economy as a

whole This was made possible by the confidence of entrepreneurs and

foreign investors prevailing in the country at that particular time The private

sector accounts for approximately 70 of total capital formation in Mauritius

Investment rate stood around 27 in the four years ending 1996 peaking to

30 in 1994 (SMIDO 1996)

9

When the government recommended the diversification of the economy with

the creation of Export Processing Zones in the early 1980‟s the EPZ sector

benefits from duty-free and quota free access into European Union markets

granted under the Lomeacute Convention as well as tariff preferences granted

under the General System of Preferences (GSP) by countries such as North

America and Japan The mid 1980s witnessed a textile boom raising per

capita incomes and living standards However the conclusion of the Uruguay

Round (General Agreement on Trade amp Tariffs) implies the loss of guaranteed

markets and preferential access which will result in strong competition in

these respective markets (Country profile 2005)

The new strategy of the industrial sector aims at targeting high quality and

high value added products with a view to restoring the competitiveness of the

goods by applying latest technology to the manufacturing industry and hence

improving the quality of the finished products Limited data is available

regarding the SME sector in Mauritius The current research has observed

that there is little research in the field in SME sector in Mauritius

In view of the importance of foreign investment as a source of sustenance to

economic growth the government of Mauritius has taken a series of policy

measures to encourage its flows into manufacturing offshore banking and

financial services information technology communication and tourism As far

as foreign investors are concerned Mauritius offers itself as an attractive

destination because several positive features such as political stability

10

availability of skilled labour and investment-friendly rules and institutions

(Stone 1997)

With such a promising economy there is virtually no evidence on how to

penetrate the business culture in Mauritius and how culture can affect SMEs

and business opportunities therefore this study will explore and understand

the business environment in Mauritius and the challenges of doing business

there as a foreign investor Currently there is very little research done on

SMEs and culture in Mauritius

13 Mauritius SME Background

Experience shows that attitudes towards small business vary from decade to

the next from country to country Before the industrial revolution all business

was small business but with industrial and commercial expansion of

developed nations small has become medium and medium has become big

business

Business owners and managers have often seen growth as an end in itself

and at time the cry get big or get out has been heard in most nations

(Meredith 2004) For more than two decades SMEs have experienced

favourable growth SME has long been prominent in the countrys economy

and make up a large portion of national economy in terms of output

employment and effective utilisation of regional resources Small and medium

enterprises in Europe make up 998 of all European enterprises provide

66 of its jobs and account for 65 of its business turnover (Meredith 2004)

11

In developing countries SMEs account more than 90 of all enterprises

Over the last five years they have been responsible for more than 80 of job

created (Stone 1997) On the issue of job creation Stone (1997) found that

SMEs create more employment than large enterprises and with a lower

investment per job created SMEs are not usually associated with international

activity but they do in fact play a significant international role and their

importance appears to be increasing Available data on SMEs international

activity are very limited (Stone 1997)

In general terms and depending on the country SMEs contribute between

15 and 50 of exports and between 20 and 80 of SMEs are active

exporters Overall it is estimated that SMEs now contribute between 25 and

35 of world-manufactured exports (UN 2005) Increased exports not only

boost the level of sales and employment but also extend the life cycle of

goods and services

In Mauritius SMEs represent 19 according to a report issued by the

Commonwealth Secretariat entitled a Study of Small Firm export Policies

and Institutions in Mauritius Subsequently these SMEs have developed

gradually and move from their tradition orientated operations to export-led

firms probably due to improvement of technology in the field of communication

and the new economic dimension which prevailed

At this juncture it is important to report that few studies on culture and small

and medium entrepreneurship have been conducted on Sub-Saharan Africa

12

There is a paucity of information and even those scarce studies they do not

cover broad perspectives of the situation of SMEs in Sub-Saharan Africa

Therefore this study builds upon the existing limited body of research

regarding how business cultures contribute to the success or failure of small

and medium entrepreneurs In particular it explores the business culture in

Mauritius and its barriers to penetration for new and foreign small and

medium entrepreneurs

14 Purpose Statement

The purpose of this study was to understand the concept on how to penetrate

an international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

15 Aims and Objectives

To investigate the challenges of national cultural differences in

business in Mauritius

To investigate how to penetrate the business environment for a new

and or foreign business culture especially in Mauritius

To investigate business opportunities for SMEs in Mauritius and how

these can benefit the locals

13

16 Research Question

How can Small and Medium Enterprises penetrate the business culture in

Mauritius

These sub-questions all pertain to SMEs business

o 161 SUB-QUESTIONS

What kind of businesses are operating in Mauritius now

What are their business strategies (marketing brands) etc

What are the necessary mechanisms for establishing business in

Mauritius

What are the business needs of established and starting businesses

What are the mechanisms for potential growth of local business

What are the challenges for doing business in Mauritius

How much of business behaviour is influenced by the national culture

17 The Significance of the Study

The findings of the current study will increase the understanding of cultural

barriers to market penetration for SMEs in Mauritius The study adds

knowledge to the body of literature in this area focusing at further

improvement of understudying of culture and business issues The

study becomes part of the universitys education development in line with its

obligations to the communities and the country This research problem arose

from an information need of a particular client This research therefore will try

to explore the client‟s information need and probably contribute to the wealth

of knowledge

14

18 Definitions

CULTURE Hofstede (1997) defines culture as ldquothe collective programming of

the mind which distinguishes the members of one group or category of people

from anotherrdquo It is the norms beliefs and values common to a society

Culture is about the way people understand their world and make sense of it

It only when this is taken for granted assumptions are challenged that people

realise that they even exist (Hofstede 1997)

ENTERPRISE An enterprise is considered to be any entity engaged in an

economic activity irrespective of its legal form This includes in particular

self-employed persons and family businesses engaged in craft or other

activities and partnerships or associations regularly engaged in an economic

activity (European Commission 2003)

INTERNATIONAL BUSINESS International business consists of transactions

that are devised and carried out across national borders to satisfy the

objectives of individuals and organizations The Primary Types of International

Business Activities Are Importing and Exporting Direct Foreign Investment

(Govindarajan and Gupta 2001)

GLOBALISATION refers to a bdquogrowing economic interdependence among

countries as reflected in the increased cross-boarder flow of three types of

entities goods and services capital and knowhow‟ (Govindarajan and Gupta

2001 4)

15

SMALL AND MEDIUM INTERPRISES (SME) is made up of enterprises

which employ fewer than 250 persons and which have an annual turnover not

exceeding EUR 50 million andor an annual balance sheet total not

exceeding EUR 43 million (European Commission 2003)

In Mauritius an SME has been redefined taking into account the volume of

investment in equipment which was previously one million up to 10 millions

Mauritian Rupees presently to be classified as a small enterprises and with

less than 50 and 200 employees for small and medium scale respectively

(Stone 1997)

16

CHAPTER TWO

LITERATURE REVIEW

The aim of this chapter is to introduce conceptual themes that are important in

order to understand the role of culture in international business The chapter

discusses the context of relationship between culture and international

business practices in small and medium enterprises (SMEs) and the major

challenges they face in the area of globalisation A model adopted from Putz

(2000) forms a framework for articulating the conceptual role that culture has

in international business using Mauritius as a case study

21 Embracing Cultural change in an era of globalization

A significant theoretical issue for international business is the role of culture in

the whole aspect of information transformation Since the landmark study by

Haire et al (1966) and the publication of Industrialism and Industrial Man by

Kerr et al (1960) researchers have continued to search for similarities in

culturally specific beliefs and attitudes in various aspects of work related

attitudes as well as consumption patterns and other behaviours If cultures of

the various communities of the world are indeed converging (Heuer et al

1999) International Business (IB) related practices would likely become

increasingly similar For example standard culture-free business practices

would emerge and inefficiencies and complexities associated with divergent

beliefs and practices in the past era may disappear (Heuer et al 1999)

17

Studies elsewhere suggest that culture gets affected by globalization practices

in the current 21st century Globalization has seen flows of information

technology money and people and is conducted via international

government organizations such as the African Union the North American

Free Trade Agreement (NAFTA) and the European Community global

organizations such as the International Organization for Standardization

(ISO) multinational companies (MNCs) Also includes cross-boarder alliances

in the form of joint ventures international mergers and acquisitions These

interrelationships have enhanced participation in the world economy and

have become a key to domestic economic growth and prosperity (Drucker

1995 153)

Literature suggests that because globalization tends to redistribute economic

rewards in a non-uniform pattern a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) Strong opposition to

globalization usually originates from developing countries that have been

affected by the destabilizing effects of globalisation However in recent years

there have been heated debates in Western economies triggered by

significant loss of professional jobs as a result of offshoring to low wage

countries (Schaeffer 2003)

Workers in manufacturing and farming in advanced economies are becoming

increasingly wary of globalization as their income continues to decline

18

significantly In parallel to the angry protests against globalization the flow of

goods services and investments across national boarders has continued to

fall after the rapid gains of the 1990s The creation of regional trade blocs

such as NAFTA the European Union and the Association of Southeast Asian

Nations have stimulated discussions about creating other trade zones

involving countries in South Asia Africa and other parts of the world

Although it is often assumed that countries belonging to the World Trade

Organization (WTO) have embraced globalization the fact is that the world is

only partially globalized at best (Schaeffer 2003)

Many parts of Central Asia and Eastern Europe including the former

republics of the Soviet Union parts of Latin America Africa and parts of

South Asia have raised heightened scepticism about globalization (Greider

1997) In fact less than 10 of the world‟s population are fully globalized (ie

being active participants in the consumption of global products and services)

(Schaeffer 2003)

According to Guile`n (2001) these trends might indicate that globalization is

being impeded by tendencies towards country-specific modes of economic

development making the convergence of IB-related values and practices

difficult to achieve Hofstede (1980)‟s favourite definition of f ldquoculturerdquo is

precisely that its essence is ldquocollective mental programmingrdquo it is that part of

peoples conditioning that they share with other members of their nation

region or group but not with members of other nations regions or groups

Hofstede (2001) asserts that these mental programs of people around the

19

world do not change rapidly but remain rather consistent over time His

findings tend to suggest that cultural shifts are relative as opposed to

absolute Although clusters of some countries in given geographical locales

(eg Argentina Brazil Chile) might indicate significant culture shifts towards

embracing Anglo values the changes do not diminish the absolute differences

between such countries and those of the Anglo countries (ie US Canada

UK)

According to Hofstede (1980) Examples of differences in mental

programming between members of different nations can be observed all

around us One source of difference is of course language and all that

comes with it but there is much more In Europe British people will form a

neat queue whenever they have to wait not so the French Dutch people will

as a rule greet strangers when they enter a small closed space like a railway

compartment doctor‟s waiting room or lift not so the Belgians Austrians will

wait at a red pedestrian traffic light even when there is no traffic not so with

the Dutch Swiss tend to become very angry when somebody-say a foreigner

makes a mistake in traffic not so with the Swedes All these are part of an

invisible set of mental programs which belongs to these countries‟ national

cultures Such cultural programs are difficult to change unless detaches the

individual from his or her culture Within a nation or a part of it culture

changes only slowly (Hofstede 1980)

20

This is the more so because what is in the minds of the people has also

become crystallized in the institutions namely government legal systems

educational systems industrial relations systems family structures religious

organizations sports clubs settlement patterns literature architecture and

even in scientific theories All these reflect traditions and common ways of

thinking which are rooted in the common culture but may be different for other

cultures (Hofstede 1980)

22 The dynamics of Culture as a Multi-level Multi- layer construct

Multi-level approaches of viewing culture as a multi-level construct that

consists of various levels nested within each other from the most macro level

of a global culture through national cultures organisational cultures group

cultures and cultural values represented the self aspect of the individual See

figure 3

21

Figure 3 The dynamic of top-down-bottom up process across levels of

culture (Source Schein 1992)

The model proposes that culture as multi-layer construct exist at all levels

from global to the individual Changes that take place at the external layer of

behaviour are most likely shared by individuals who belong to the same

cultural background level hence characterising the aggregated unit (Schein

1992)

Top-

Down

Individual

Behaviour

Values

Assumptions

Global Culture

National Culture

Organizational Culture

Group Culture

Bottom

Up

22

Below the global level are nested organizational layers or networks at the

national level with their local cultures varying from one nation or network to

another Further down are local organizations and although all of them share

some common values of their national culture they vary in their local

organizational cultures which are also shaped by the type of industry that

they represent the type of ownership the values of the founders etc Within

each organization are sub-units and groups that share common national and

organizational cultures but differ from each other in their unit culture based on

differences in functions of their leaders‟ values and the professional and

educational level of their members At the bottom of this structure are

individuals who through the process of socialization acquire the cultural values

transmitted to them from higher levels of culture Individuals who belong to the

same group share the same values that differentiate them from other groups

and create a group-level culture through a bottom-up process of aggregation

of shared values (Schein 1992)

Both top-down and bottom-up processes reflect the dynamic nature of culture

and explain how culture at different levels is being shaped and reshaped by

changes that occur at other levels either above it through top-down

processes or below it through bottom-up processes(Schein 1992) Similarly

changes at each level affect lower levels through a top-down process and

upper levels through a bottom-up process of aggregation The changes in

national cultures observed by Inglehart and Baker (2000) could serve as an

23

example for top-down effects of economic growth enhanced by globalization

on a cultural shift from traditional values to modernization

In view of the complexity of the organizational structures specific

organizational structures that have global character need to be established so

as to adopt common rules and procedures in order to have a common

bdquolanguage‟ for communicating across cultural borders (Kostova 1999 Kostova

and Roth 2003 Gupta and Govindarajan 2000)

Given the dominance of Western Multi National Companies (MNCs) the

values that dominate the global context are often based on a free market

economy democracy acceptance and tolerance of diversity respect of

freedom of choice individual rights and openness to change (Gupta and

Govindarajan 2000) The multi-level structure explains how a lower-level

culture is being transformed by top-down effects and that the cultural layer

that changes first is the most external layer of behaviour In the long run

bottom-up processes of shared behaviours and norms would affect the local

organizational culture as well (Schein 1992)

23 International Business and Culture

Knowledge of cultural differences is one of the key components in

international business practices and success Improving levels of cultural

awareness can help companies build international competencies and enable

individuals to become more globally sensitive (Hofstede 2003) Indeed

cultural differences contribute towards different ways people behave in

24

business Research in the field of international management underscores that

the attributes of cultural knowledge used by a firm play an important role in the

firms expansion For example Martin and Salomon (2003) found that cultural

orientation in entrepreneurial action is a central theme and can serve as a

starting point for immigrant business

ldquoUnderstanding the culture and the conceptualisation of culture in conjunction with entrepreneurial action is a critical issue when doing business in an international environment Contributions of economic geography inspired by the cultural turn which shows alternative ways of thinking about the connection between culture and economy by using a new understanding of culture are also critical (pg 198)rdquo

The statement underscores the important of understanding the culture of a

society before attempting to do business there otherwise the company runs a

risk of going out of business The ways in which different groups of people

interpret their environment and organise their activities is based the on the

specific cultural values and assumptions Certain values often thought to be

universal really do differ from culture to culture What constitutes an ethical

business practice is not the same everywhere This can be an enormously

difficult area in managing business across cultures (Straub et al 2002)

Although one may claim cultural differences to be going away they are

actually being absorbed in the business practices This makes it more critical

than ever to try to understand different cultures and their influence on the

ways people do business and view the world The costs of not understanding

are getting greater than ever The essence of culture is not what is visible on

the surface It is the shared views about what people understand and interpret

25

the world These cultural differences are crucial influences on interactions

between people working and managing across culture (Gertler 1997)

The social behaviour of a society is embedded in a particular context and is

connected to other deeply held values and beliefs (Weisinger and Trauth

2003) This means that the stakes are high for mismanaging cultural

differences Ignoring or mishandling differences can result in an inability to

retain and motivate employees a misreading of the potential of cross-border

alliances marketing and advertising blunders and failure to build sustainable

sources for competitive advantage Mismanaging cultural differences can

render otherwise successful managers and organisations ineffective and

frustrated when working across cultures (Weisinger and Trauth 2003)

24 Putz Model For Immigrant Business and Culture

Literature in the field of Immigrant Business differentiates mainly between two

basic approaches each with a different emphasis which are combined to

explain entrepreneurial action of immigrants (Putz 2000) The first approach

emphasis the bdquoopportunities‟ offered by the host country including access to

the market and job market conditions The second approach focuses on the

bdquoresources‟ of migrant groups from whom the concept of culture becomes

essential (see Figure 1 below)The Putz (2000) cultural model below is a

summary of explanatory approaches following the assumption that self

employment of certain groups is the result of their specific cultural

predisposition which favours business activity

According to Putz‟s (2000) view of cultural model the bdquoopportunities‟

approach which refers to market possibilities as an explanation for self

26

employment of immigrants assume that there are certain market segments

with favourable development perspectives especially for immigrant groups

Here two factors receive special attention which are niche markets and legal

and institutional frameworks Niche markets make the establishing of business

by immigrants easier because their needs for consumer goods create specific

demand Legal and institutional frameworks gain awareness in international

comparative studies through restrictions specified by a country regarding

business permits and regulations these frameworks influence both the extend

and the sectored structure of the bdquoimmigrant business‟ (Putz 2000)

According to Putz (2000) the observation that most immigrant groups show a

higher level of self employment rate than others often forms the background

explanation which focus on opportunities created by the host society

Resource models stress the shared characteristics of migrants of same origin

Resources models explain that certain groups have specific cultural

resources which make it easier for members of that group to become self

employed therefore one can distinguish between the cultural traditions and

socialethnic networks ( Putz 2000)

27

Figure 4 Dominating models concept of bdquoImmigrant Business‟ (Source Putz

2000)

OPPORTUNITIES

Market Access

Possibilities

Market Conditions

Niche Markets

lsquoOpenrsquo Markets

Job Market

Conditions

Access

Vertical Mobility

Legal and Institutional

Frameworks

lsquoEthnicrsquo

Business

RESOURCES

lsquoClass Resourcesrsquo lsquoCultural Resourcesrsquo

Cultural

Traditions

Social lsquoEthnicrsquo

Resources

28

When successfully managed differences in culture can lead to innovative

business practices faster and better learning within the organisation and

sustainable sources of competitive advantage (Sondergaard and Hofstede‟s

1994) In relation to that the current study argues that managers need to

study and understand the culture and the niche market before investing This

assumption has been raised as a result of the previously reported experiences

and research findings already reported so far It is therefore critically important

to understand that every society has got its own way of behaving which needs

to be understood if the business is to succeed Operating companies need to

understand what their business means to the people of the given community

and their culture

Several studies of international business have indicated that

internationalization of the firms is a process in which the firms gradually

increase their international involvement(Johanson amp Wiedersheiml 1995

Gibson 1999 Chui et al 2002 ) It seems reasonable to assume that

within the frame of economic and business factors the characteristics of this

process influence the pattern and pace of internationalization of firms Figure

5 below shows a model of the internationalization process of the firm that

focuses on the development of the individual firm and particularly on its

gradual acquisition integration and use of knowledge about foreign markets

and operations and on its successively increasing commitment to foreign

markets The basic assumptions of the model are that lack of such knowledge

is an important obstacle to the development of international operations and

that the necessary knowledge can be acquired mainly through operations

abroad (Johanson and Wiedersheiml1995)

29

FIGURE 5 The Basic Mechanism of Internalisation- State and Change Aspects

Figure 5 Basic Mechanism of Internalisation (Source Johanson amp

Wiedersheiml 1995)

Market knowledge and market commitment are assumed to affect both

commitment decisions and the way current activities are performed These in

turn change knowledge and commitment ( Aharoni 1966) In the model it is

assumed that the firm strives to increase its long-term profit which is

assumed to be equivalent to growth (Williamson 1966) The firm is also

striving to keep risk-taking at a low level These strivings are assumed to

characterize decision-making on all levels of the firm Given these premises

and the state of the economic and business factors which constitute the frame

in which a decision is taken the model assumes that the state of

internationalization affects perceived opportunities and risks which in turn

influence commitment decisions and current activities (Johanson amp

Wiedersheiml 1995)

Market

Knowledge

Market

Commitment

Commitment

Decisions

Current

Activities

30

2 5 The Role Of Information Communication Technologies

Hofstede (2001) observed that not only will cultural diversity among countries

persist but also new technologies might even intensify the cultural differences

between and within countries Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

Information communication technologies (ICTs) enable users to access varied

amounts of information globally however it does not necessarily increase

their capacity to absorb the information at the same rate as the information is

disseminated or diffused (Bhagat et al 2002) In addition information and

knowledge are interpreted through cultural lenses and the transfer or diffusion

of organizational knowledge is not easy to accomplish across cultural

boundaries (Bhagat et al 2002)

Ethnic groups around the world observe the lifestyles and cultural values of

other countries and some are interested in adopting part of the lifestyle and

values but others reject it completely (Kirkman and Shapiro 2000) The

effects of new technologies on improving efficiencies of multinational and

global corporations are well known but it is not known how these new

technologies especially computer-mediated communication and the Internet

31

might create significant shifts in the cultural patterns of different ethnic groups

(Kirkman and Shapiro 2000) or on their ways of doing business

In essence there in need to explore how the spread of ICTs is affecting the

progress of globalization in different parts of the world by incorporating the

role of cultural syndromes organizational cultures and other processes

which has recently been attempted by scholars such as Bhagat et al (2003)

and Gibson and Cohen (2003)

Information and Communications Technology (ICT) has become a catchword

with different interpretations and viewpoints even among experts As the

name suggests ICT encompasses all the technology that facilitates the

processing transfer and exchange of information and communication

services In principle ICTs have always been available since the advent of the

printing press The only difference is that from the late twentieth century rapid

advances in technology changed the traditional ways in which information was

processed communications conducted and services available (Adu 2002)

These technological advances have changed business operations and the

way people communicate They have introduced new efficiencies in old

services as well as numerous new ones One could even imagine going as far

as replacing the term Post-industrial Society with ldquoInformation Society that

is a society where the ability to access search use create and exchange

information is the key for individual and collective well-being (Kaplan 2001)

32

Globally entrepreneurship is considered as the engine of economic

development The SME sector has the potential to address socio-economic

challenges facing both developing and developed countries Without small

business development it is argued that economies stagnate unemployment

levels continue to rise and the general standard of living deteriorates

Information and communications technology (ICT) has been identified as a

major area of need to develop the SME sector in areas of information

provision access to national and international markets and other areas of

business development and support ( Ferrand and Havers 1999)

ICTs enable entrepreneurs to manage their businesses efficiently and thus

enhancing their competitiveness in the global market They can increase their

geographic reach improve efficiency in procurement and production and

improve customer communications and management For these reasons the

need to encourage and accelerate the uptake and optimal application of ICTs

by SMEs in different sectors of the economy cannot be overemphasized

(Ramsay et al 2003) The ICT sector has the potential to absorb prospective

entrepreneurs considering various business opportunities offered by the

sector Some of the business opportunities available within the sector relate to

systems integration application development database administration web

design and internet service provision The sector is also seen as an area with

major opportunities for the historically disadvantaged sectors of the

population It therefore becomes imperative for government to provide

mechanisms to accelerate the entry of SMMEs into the ICT sector (ILO 2001)

33

26 Cross Culture and International Business

Cross-cultural management advice rests on several assumptions in the

tradition of Hofstede (1997) that a) that national culture is comprised of norms

and values that can be readily identified and addressed b) that these norms

values and patterns of behaviour are stable and change at an extremely slow

pace and c) that national culture predominates over organizational culture

epistemic culture gender or other determinants of attitudes and behaviour

According to Hosftede (1997) national culture is comprised of norms and

values that can be readily identified and addressed

Organisational culture (common values and attitudes) affects organizational

success and innovation develops over time and may be difficult to change

ldquoThere is a relationship between an organization‟s culture and its

performance The pervasive nature of organizational culture means that if

change is to be brought about successfully this is likely to involve changes to

culturerdquo (Mullins 1999)

An alternative view sees culture as more complex context-specific and

dynamic For example Weisinger and Trauth (2003) examined the interaction

of national cultures the IT industry culture and a particular firm‟s

organizational culture They observed that the resulting situated culture ldquois

fluid contextually dependent and created by actors within a group who may

hold conflicting assumptions and world viewsrdquo In other words culture is as

what it is because of what it does This means that management must ensure

34

that key capabilities for example marketing analytics or process controls are

developed and nurtured across the organization

Successful global managers recognize that they cannot respond to every

unique opportunity that local settings offer Thus there is an inherent tension

in cultural sensitivity a management team which is ldquotoo sensitiverdquo to cultural

and structural features exposes the organization to the risks that come with a

lack of focus and coherence while managers who do not take cultural and

structural features into account expose the organization to the risks that come

with organizational rigidity (Myres and Tan 2002)

According to Mistry (1999) entrepreneurial networks and clusters in sub-

Saharan Africa have not generally produced the kind of strong transnational

links that characterize Asia‟s flourishing pattern of industrial diffusion The

author states that the reasons for this are complex differences in geography

different models provided by leading countries in the neighbourhood and

policies adopted by governments in the respective regions Chinese business

networks are responsible for some of the information ideas and capital that

helped launch the small Indian Ocean nation of Mauritius as an important

centre for export-oriented industry The Chinese networks in Mauritius also

continue to facilitate a role that Mauritius first began to play in the eighteenth

century they serve as a gateway for overseas Chinese entrepreneurs

interested in investing both in Mauritius and elsewhere in Africa (Mistry 1999)

35

27 Investing in Mauritius

There are a lot of advantages in investing in Mauritius The economy of the

country is stable and the graph of the economy and business is one the rise

for a considerable period of time The Mauritius government has undertaken a

sequence of strategic measures to support its course into offshore banking

manufacturing and financial services communication technology and tourism

keeping in mind the significance of foreign investment as a basis of

nourishment of the financial development (Dabee and Greenaway 2001)

According to Dabee and Greenaway (2001) tthere are various factors that

influence financiers to invest in Mauritius like accessibility of skilled labor

political constancy and venture-friendly institutions and regulations One of

the major factors for the development of Mauritius is the Foreign Direct

Investment (FDI) The government of Mauritius has given all the necessary

support to create the most favorable investment setting by the following steps

Building modern infrastructure

Endorsing suitable legislations

Commencing packages of investment inducements

Investing in human capital

Some of the advantages of investing in Mauritius are as follows

High-quality infrastructure with superb transportation

Democracy and a steady government

Free market financial system fastened on export slanting activities

Excellent system of sea and air transport

36

High standard of living good international schools

A highly educated bilingual and responsive work force

Knowledgeable financial segment providing outstanding services

Constructive market contact and good inducements ( IBP 2002)

Mauritius has various sectors where investment can be made like Information

and Communication Technology and manufacturing For doing business in

Mauritius registered trademark is required The trade marks for business are

issued by the registered Patents and Trademarks sector of Ministry of Foreign

Affairs International Trade and Cooperation In the country of Mauritius a

foreigner is eligible to hold 100 shares In this case one of the directors of

the company has to inhabit in Mauritius and the foreign individual has to

obtain a sanction from the Office of Prime Minister (IBP 2002)

In Mauritius the laws concerning income tax is based on the English law of

income tax The companies in Mauritius are lawfully accountable to pay out

income tax on their profits at an even rate of 25 A company which is

included in the country or has its scheming benefit in the country is measured

for tax reasons to be an occupant corporation To the Mauritius companies

various types of tax incentives are granted The companies that hold

certificate for Tax inducement are responsible to tax at an abridged rate of

15 while the scheduled companies are accountable to pay tax at the rate of

25 ( Dabee and Grrenaway 2001)

37

CHAPTER THREE

METHODOLOGY

Having looked at culture to some depth this chapter explains the methods

used in carrying out the study The study used mixed method approach to

allow for data corroboration and dynamism since the subject in question

needed dynamism and sensitivity in approach

This research mixed both qualitative and quantitative approaches to try and

get best possible research by combining both features because they

complement each other Quantitative data techniques condense data in order

to get a bigger picture whereas qualitative techniques are data enhancers

making it possible to see issues more clearly (Dawson 2002 Neuman 2000)

Attempt was made to keep in line with recommendation made in the Leeds

Declaration proposition number 6 which calls for the application of multiple

methods and perspectives to try and understand social and cultural issues

(Hunter and Lang 1993) Mixing qualitative and quantitative methods also

called positivist and interpretive respectively (Gilbert 2001 and Bowling 2002)

is effective in a complex issue study such as this one because they highlight

different perspectives of the same problem in this case - the public in parallel

with the individual level(Gilbert 2001) This is because quantitative methods

adopt a numerical approach to data collection and analysis to provide macro

level perspective whereas qualitative methods provide micro level perspective

through collecting data from individuals (Ibid)

38

There was also use of impersonal (public) documentation using official

records which were more library based research (Grbich 1999) on top of

theory generating field based methods (Ibid) Many researchers (Bowling

2002 Neuman 2000 Grbich 1999 Denscombe 2003 and Gilbert 2001)

concur that neither of the methods is superior to the other but just different

each having its strengths and weaknesses (Dawson 2002)

The study sought to explore the attitudes behaviour subjective meanings and

experiences of the participants making qualitative approaches best suited

because they emphasize the importance of context (Neuman 2000) However

to generate objective and factual (Maynard and Purvis 1994) statistical

figures quantitative research was more suitable Hence mixing of methods

(Dawson 2002 Denscombe 2003) to counteract weaknesses in both

approaches to give breadth and width to the study (Maynard and Purvis

1994) The flexibility of qualitative research allowed for re-focusing and

refinement of the tool dependent on participants‟ reactions throughout

(Neuman 2000) to pick up any emerging evidence thus applying the

grounded theory approach (Dawson 2002)

39

31 Research Setting

Mauritius is a volcanic island of lagoons and palm-fringed beaches in the

Indian Ocean Southern Africa east of Madagascar with a population of

about 12 million has a reputation for stability and racial harmony among its

mixed population of Asians Europeans and Africans The island has

maintained one of the developing worlds most successful democracies and

has enjoyed years of constitutional order since independence in1968 Over

the past three and half decades the country has been transformed from one

of the poorest in the world to a middle income country with per capita Gross

Domestic Product US $7000 (World Bank 2006) It has preserved its image

as one of Africas few social and economic success countries that mainly

depends on sugar and clothing export and a centre for upmarket tourism But

Mauritian exports have been hit by strong competition from low-cost textile

producers and the loss of sugar subsidies from Europe Consequently

attention has turned to diversification in line with global trends

To this end SMEs have been identified as important instruments to achieve

economic diversification Today the government vigorously supports SMEs

through a range of strategies eg the creation of a business friendly climate

via import liberalisation tax reforms and the launch of the SME Partnership

fund which gives subsidized loans to aspirant SME owners and makes the

availability of finance and facilitating access in particular for those enterprises

that have viable projects but are short of equity The Small Enterprises amp

Handicraft Development Authority (SEHDA) was created following the merger

of the Small amp Medium industries Development Organisation (SMIDO) and the

National Handicraft Promotion Agency (NHPA) The aim of the merger is to

40

rationalize and optimize the use of resources dedicated to the small business

sector in Mauritius

Various cultures and traditions flourish in peace though Mauritian Creoles

descendants of African slaves who make up a third of the population live in

poverty and complain of discrimination Mauritius was uninhabited when the

Dutch took possession in 1598 Abandoned in 1710 it was taken over by the

French in 1715 and seized by the British in 1810 The culture of the country

reflects its diverse ethnic composition There are many religious festivals

some important ones being (in random order) Divali (the hindu festival of

lights in October) Christmas Cavadee (a penitence festival of the south

Indian tradition of hinduism in January) Eid ul Fitr (celebrating the end of the

period of fasting in Islam As the Islamic calendar does not correspond to the

Gregorian calendar the date of its celebration in the year tends to vary In

2003 it was celebrated in November) With such a strong history diverse

culture and such a promising economy painted above makes Mauritius a rich

setting to investigate culture and small medium business entrepreneurship

32 Methods

As justified already this study applied method mix to exploit the benefits of all

methods used while minimising the effects of their weaknesses The obvious

benefit of method mix is that it involves more data which is likely to improve

the quality of research (Denscombe 2003) and that is what the researcher

sought to achieve In deciding which method to use it was acknowledged that

the chosen methods were not superior in any way but more suited to the study

41

circumstances based on the premise of ldquohorses for courses (Denscombe

2003 page 83)

A Questionnaire used in the online web survey allowed for collection of

data from large numbers of participants economically since the project had

financial and time limitations (Ibid) The other advantage of survey exploited is

generation of quantitative data However weaknesses of the method

(empiricism lack of depth and accuracy of responses) were a challenge The

questionnaire was open ended and was completed by the participant in the

absence of the researcher Any questions arising from the participant not

understanding or misinterpreting the question where not taken care of Focus

groups were used to gain depth into some of the emerging issues from

questionnaires to gain insights into the issues surrounding widow inheritance

and to validate some of the data (Denscombe 2003) Telephone and face to

face interviews were used to gather to gain in-depth information on the

issues

All accessible literature on culture and investment in Mauritius as well as

other parts of Africa was reviewed to get insight into any related work to

identify key issues and current knowledge gap so as to sign post this study for

any audience (Ibid)

42

33 Research Participants and sampling

It was difficult to get exact demographic data for each sector Consequently it

was not possible to use any scientific sampling techniques The study

therefore used non-probability sampling (Neuman 2002 Bowling 2002

Denscombe 2003) targeting urban based population

The sample baseline characteristics were

SME managers from aged 18 years and above and over 65 was the

limit Any religion faith Any socio-economic background and residents

of Port Luis and surrounding areas

To sample for quantitative data purposive and snowballing sampling

techniques were used because it was not possible to apply any statistical

formula in getting the samples since there was no single list of SME managers

and other stakeholders to use with any form of probability sampling

Participants were snowballed from one sector to another until the whole

sectors were covered For the focus groups homogenous and critical case

(Grbich 1999) sampling was used to get particular sub group to provide

details In this case to get government officials and the private sector who

were strong enough to talk about their experiences

A total of 161 participants were reached from all the sectors These included

SME manager government officials and the private sector The researcher

wishes to point out that these numbers were not conclusive The numbers

could be much higher because in case the researcher phoned the participants

they were not available to take the call there was no time to go back to

43

ascertain the details Those who were not willing to take part in the study were

also excluded from the above figures For the focus groups discussions 5

government officials and the private widows were invited and used Skype

technology to do a conference

The times when the participants were contacted met were entirely dependent

on participant availability and other events at the time (Gilbert 2001) It varied

between 800 am and 700 pm in the evening because of the time differences

UK and Mauritius time Care was taken to avoid compromising times such as

late in the evening or culturally sensitive days such as weekends when people

were engaged in funerals and church services in this case

The participants showed weariness towards the study because as they put it

ldquoa lot of people come along claiming to collect data to help but never show up

againrdquo

34 Data collection Instruments

The researcher developed an online quantitative data collection questionnaire

(web survey form) which was posted on the university web server with help of

the department technicians A multiple recipient list was created from the

details in the SEHDA website and was randomly sent to the recipients These

only included the SME managers from the seven sectors About 20 contacts

were selected from each sector which made a total of 140 participants

Telephone interviews were made to about 17 government officials and the

private sector who were later divide n to focus groups and a teleconferencing

44

was organised on Skype Face to face interviews were done with government

officials from the Mauritian High Commission in the UK

Apart from the questionnaire an Olympus VN 2100 PC Digital Voice Recorder

was also used during the focus group discussion with the permission of

participants also on telephone interviews and face to face interviews This

was tested set and correctly positioned by the telephone speaker before the

session began to ensure proper functioning It was fitted with a mini

microphone to improve recording quality The digital voice recorder small in

size (only 68 grams in weight) proved user friendly because it was not

intruding too much into the face of participants as opposed to older recording

devices There was a pair of AAA batteries on standby in case the batteries in

use ran flat during the session

35 Ethical Considerations

This study involved very little of sensitive issues but it strived very much to

adhere to the fundamental principles of Human Research Ethics of Respect

for Persons Beneficence and Justice The researcher ensured autonomy self

determination and protection of vulnerable persons through informed consent

participation confidentiality and thorough explanation of what the research

was all about to those with limited knowledge and education Any risk that

might have resulted from the study was minimised as much as practically

possible and the researcher took full responsibility for the protection of

participants There was no form of discrimination other than on participant

baseline characteristics

45

The study also upheld the six key ethical research principles as stipulated by

ESRC - UK (ESRC 2005) To ensure anonymity pseudonyms were used for

participants The information gathered was safely protected through password

use on the computer system and only the researcher had access to the

information The researcher was responsible for storage and destruction of

any information no longer needed such as audio files after transcription

Research respondents participated in a voluntary way free from any coercion

and free to withdraw at any point should they felt uncomfortable

The first ethical committee whose approval was sought was the University of

Sheffield Ethical committee after which the researcher sought ethical approval

from Mauritian authorities through the relevant ministries It was not straight

forward getting ethical approvals in Mauritian but ultimately the ministry of

SMEs approval was obtained

36 Procedure

After all the necessary approvals were obtained the researcher wrote an

explanatory letter (Grbich 1999) or bdquoparticipant‟s information sheet‟ (appendix

5) which included information on informed consent (Denscombe 2003)

After piloting the tools the researcher started by making calls to make

appointment for interviews As the quantitative data collection went on

recruitment of participants to take part in qualitative aspect was done

simultaneously due to time constraints The researcher used individual

judgement to asses those participants who would be courageous enough to

respond to the questionnaire online and to the interviews The managing

46

director for RCBusiness Support Ltd also provided a number of potential

respondents who were used at the initial stages of the study Each interview

session lasted averagely 50 minutes The researcher went to organise the

teleconferencing for the focus group on Skype which also lasted for average

50 minutes

37 Data Analysis

Since the distinction between quantitative and qualitative research is not

watertight (Denscombe 2003) data analysis embraced both because they

have similarities and differences (Neuman 2000) There was analysis of

words and numbers thus holistic versus specific focus (Denscombe 2003)

The analysis adopted a five stages approach (Denscombe 2007) The first

stage was data preparation followed by data exploration analysis

presentation and finally validation

Though some researchers champion for advanced inferential statistics

(Denscombe 2007) the researcher opted for descriptive statistics for the

quantitative data analysis because they still remain effective ways of data

analysis and presentation (ibid) The research data involved nominal as well

as discrete and continuous data which could effectively be analysed using the

chosen method The data was grouped frequencies were described and

finally any linkages were identified The end product of the analysis process

is presented in the results section in various formats Basic statistical

techniques were used to give the data additional credibility in terms of

interpretations of the findings (Denscombe 2007)

47

For the qualitative data the first thing was to back up the original voice

recorded focus group discussion into a password protected lap top This

ensured not only the security of the data but also a back up in case of data

loss The researcher then listened to the recording several times to familiarise

himself with the data after which transcription took place After that the data

was interpreted and categories themes were identified since thematic

analysis was employed The Putz (2000) model was used as a guide to

finding themes The findings are presented in the results section

38 Planned programme of dissemination

The study findings were disseminated to all relevant stakeholders in print

format including the university as part of the postgraduate degree requirement

in academically fulfilling format Two copies of the report were sent to the

Ministry of SMEs in Mauritius and two copies to the Board of Investment of

Mauritius in the UK as part of the requirements of ethical approval and

research permission granted by the ministry

Finally it was hoped that the report would meet publication requirements so

that it could get a wider audience through a reputable journal

48

39 Time scale

The study was anticipated to take the following breakdown from the time all

ethical approvals and consent were obtained

Table 1 Table showing the study time scale

Stage Time allocation Action item Accountable person

I Weeks 1 - 3 Research set up Sampling and

access to participant negotiations

Angelinah Boniface

II Weeks 4 - 12 Data collection and Analysis Angelinah Boniface

III Weeks 12 - 16 Analysis Report writing and

dissemination

Angelinah Boniface

310 Limitations and Delimitations

This study was not fully funded as such high telephone costs travelling

affected the exercise Only business people in Mauritius both men and women

were interviewed The study covered both local and foreign investors

Participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

49

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

A major limitation is a low response rate of the questionnaire and therefore a

representative sample of the SME population was not achieved Thus any

conclusions made from the analysis of the collected data cannot be

generalized to the broader SME population Bias may have been inadvertently

introduced during interviewing caused from such things as leading questions

50

CHAPTER 4

RESEARCH FINDINGS AND DISCUSSION This chapter aims to discus the research findings from the study The chapter

is divided into two sections the first part presents and discusses the

quantitative data and the second part discusses qualitative It is therefore

worth mentioning that the Putz (2000) model was used to guide the

qualitative data analysis and some of the themes were taken from the model

and some were generated from the research findings It must be noted that

any findings uncovered from this study cannot be generalized to the broad

public domain regarding SMEs

Section A of the questionnaire and the interview guide included questions that

collected background information on the SME managers and the responding

firms These data constitute the substantive material for analysis in the

ensuing sections The tables below depict the socio demographic

characteristics of the survey participants age group gender educational level

and experience as ownermanager In the following sections there aspects

are discussed

51

41 RESPONDENTS RATE ACCORDING TO SECTORS

TABLE 2

SECTOR SEHDAS SURVEY SENT

SURVEY RECEIVED

RESPONSE RATE

Leather and Garments

1678 20 12 60

Wood and Furniture

2196 20 11 55

Paper Products and Printing

1541 20 9 45

Chemical Rubber and Plastic

1376 20 11 55

Pottery and Ceramic

793 20

17 85

Jewellery and Related Items

1674 20 13 65

Fabricated Metal Products

1267 20 14 70

TOTAL 7 140 101 72

Table 2 shows the response rates from various sectors of SME in Mauritius

which were targeted by the online survey As the table indicates pottery and

ceramic sub sector had the highest response rate (85) with paper products

sector giving the least response rate (45) Overall 72 response rate from

all the targeted sectors was satisfactory It is worth mentioning that the total

number of participants adds to 140 since this question was only directed to

sectors not to other stakeholder in the research sample

52

42 DEMOGRAPHIC PROFILE PARTICIPANTS

TABLE 3 AGE GROUP AS PER PARTICPANT

AGE GROUP FREQUENCY PERCENTAGE

-25 7 43

26-35 34 211

36-45 53 329

46-55 35 217

56-65 22 137

gt 65 11 63

TOTAL 161 100

Evidence from most of entrepreneurial literature suggests that self-

employment becomes an increasingly attractive option as one nears middle

ages As can be seen in table 3 respondent‟s ages ranged from 25 to 65 and

the largest proportion (329) of the participants was in the age range of 36ndash

45 Additionally participants were biased towards the age ranges of between

36 and 65 and away from the under 25 and over 65

TABLE 4 GENDER PROFILE AS PER PARTICIPANT

GENDER

Male 116 720

Female 45 280

TOTAL 161 100

53

In relation to gender the research sample was predominantly male (72) a

striking although unsurprising demographic characteristic that reflects the

composition of the larger business sector in the country as a whole

Consequently only (28) were females This is clearly illustrated in table 4

above

TABLE 5 EDUCATION PROFILE AS PER PARTICIPANT

EDUCATIONAL LEVEL

Primary 8 50

Junior-level 29 180

O-level 78 484

Diploma 34 211

Higher Degrees 12 75

TOTAL 161 100

As evident from table 5 the educational levels attained by respondents varied

considerably as follows Primary School Certificate (8 or 5) Junior

Certificate (29 or 180) Ordinary Level (78 or 484) Diploma (34 or

211) and higher Degrees (12 or 75 ) On the whole though the data

suggest that the educational levels of our respondents are low the largest

proportion (398) possessing an Ordinary Level certificate

54

TABLE 6 YEARS EMPLOYED AS CEO AS PER PARTICIPANT

Years Of Employed as CEO

0-3 44 273

4-7 88 546

8-14 15 94

15-19 11 68

Over 20years 3 19

TOTAL 161 100

Not surprisingly table 6 shows that most of the responding executives did not

have education that emphasized a business curriculum This can be

understood with respect to the Mauritian educational curriculum which largely

overlooked business subjects until very recently

The research sample participants had been employed at their current firms on

average 1467 years and had an average of 12 years experience in the

manufacturing industry Four predominant job titles used by the senior

executives emerged from the questionnaireinterview responses Managing

Director (38) Director (26) Manager (20) and Chief Executive Officer

(16)

55

43 CHARACTERISTICS OF RESPONDING FIRMS

This section presents the descriptive statistics of the responding firms The

description focuses on age of the firm employment size firm revenues and

firm ownership

TABLE 7 COMPANY AGE PROFILE

Age of Company Frequency Percentage

1- 3 years 44 314

4- 6 years 68 486

7-10 years 19 136

11-15 years 7 50

Above 15 years 2 14

TOTAL 140 100

Table 7 displays the statistical data Of the firms responding the largest

proportion (486) was 4 to 6 years old Overall the sample reveals a skewed

distribution towards the ranges between 4 and 15 Also it is interesting to note

that 915 of the responding firms are mature that is beyond the start-up

phase

TABLE 8 EMPLOYEE PROFILE AS PER PARTICIPANT

Number of Employees

50-99 101 721

100-200 39 279

TOTAL 140 100

56

Unsurprisingly the vast majority of the responding businesses had fewer than

100 employees as depicted n table 8 with the largest proportion (701) in

the 50ndash99 employee categories The study found out that most small

companies would opt to have family and relatives as employees to minimise

costs Only 32 average of the firms were medium-size The preponderance

of small firms in the sample mirrors a more general pattern of firm distribution

in the country where medium and large firms are a conspicuous small

minority

TABLE 9 ANNUAL SALES AS PER COMPANY

Annual Sales

Less than R100 000 88 629

R101 000- R250 000 36 257

R251 000- R15 million 11 79

Above 15 million 5 35

Total 140 1000

As shown in table 9 the largest proportion of responding firms 88or 629

achieved a turnover below R10000000Only scant 11 or 79 posted annual

revenue in excess of R15 million

57

TABLE 10 OWNERSHIP AS PER PARTICIPANT

Ownership

Wholly Citizen 76 550

Joint Venture 42 293

Foreign Owned 22 157

TOTAL 140 100

Regarding ownership table 10 shows that an overwhelming majority or 550

of firms were wholly citizen-owned while the remaining 293and 157

were joint venture with citizen stake and foreign-owned respectively

44 Language

From most of the participants investors do not have to learn Local Mauritius

language since English and French are the official languages in the country

Since most of the investors to Mauritius are either English or French speaking

language as such is not a barrier to business practices and success for

prospective investors

ldquohellipwell it is not very important for foreign investors to learn languages

spoken in Mauritius because we can speak both English and Frenchrdquo

[Participant A5]

ldquohellipactually language is not barrier to English or French speaking investorsrdquo

[Participant A21]

58

Language is perhaps the most complex and perplexing aspect of the

Mauritian social mosaic (Rassool 1996) Contrary to the results that show that

language is not a problem for investors since most of the investors who come

to Mauritius are English or French speakers who normally fits well in the

society since these are the two official languages

This intricacy derives from the number of languages spoken combined with

the uses to which they are put and the socio-political connotations they bear

Baker and Stein (1977) scholars studying language use in Mauritius have

found that English is associated with knowledge French with culture

Creole with egalitarianism and other languages ancestral heritage

Consequently although Creole is the most widely spoken language in the

country French predominates in the media and English is the official

language of government and school instruction (Stein and Baker 1977)

According to the 1983 census the top five languages were Creole 541

Bhojpuri 204 Hindi 115 percen French 37 and Tamil 37 These

figures indicate the principal language used in the home Most Mauritians

however speak several languages

Literature suggests that global organizational structures need to adopt

common rules and procedures in order to have a common bdquolanguage‟ for

communicating across cultural borders (Kostova 1999 Kostova and Roth

2003 Gupta and Govindarajan 2000) This is directly reflected by the results

above that foreign investors need not to learn the local language of locals but

its important to create a common language within the organisation that is

59

understood by all stakeholders in the organisation for effective and efficient

communication

45 Religion

The study found that main religions in Mauritius are Hindu Muslim and

Christianity to a lesser extent Hindus make up approximately half of

religiously affiliated Mauritians Of the remaining Mauritians approximately a

third are Christians and about 15 Muslim followed by small Buddhist and

Sikh communities It is therefore imperative that a foreign investor considers

religion of the people of Mauritius before setting up a business Religion

The study also found out that various religions found on Mauritius tend to play

a major part in the islands cultural events and churches temples and

mosques are to be found everywhere Hindu and Tamil celebrations are part

of Mauritian cultural life

ldquohellipFestivals such as Divali (the festival of lights) Holi (in which participants

are covered in colourful powders) and Thai Poosam in which Tamil devotees

pierce their bodies with masses of needles as an act of penance are

popularly attended by Mauritianshelliprdquo [Participant A60]

ldquohelliphellipthere are also a number of diverse practices and superstitions

originating in beliefs brought from Africa and Asia Local sorcerers known as

longanistes or traiteurs are sometimes called in to settle arguments exact

revenge or administer love potionshelliphelliprdquo [Participant B41]

60

However all communities live together in harmony with each other regardless

of religion the study learnt

hellipHarmonious separatism is how we characterise our communal relations

in Mauritiushellip [Participant A13]

Since all citizens are ldquodescendants of slavery there are no tribes unlike

other African countries This has made integration and assimilation easier and

it makes it very easy for any SME to adapt to the local conditions due to pre

existing harmonyrdquohellip [Participant A13]

It is worth noting that businesses remain closed in public religious days but

the purchasing power remains the same regardless of whether it‟s a public

holiday or not

ldquohellipthe demand is not dependent on whether itrsquos a holiday or nothelliprdquo

[Participant A11]

ldquohellipit doesnrsquot matter really whether its holiday or religious holidayhelliprdquo

[Participant A21]

According to Stein and Baker (1977) the Mauritian society is noteworthy for

its high degree of religious tolerance Mauritians often share in the

observances of religious groups other than their own In part as a result of the

multiplicity of religions Mauritius has more than twenty national holidays In

addition the government grants subsidies to all major religious groups

61

according to their membership (Stein and Baker 1977)This is also evident

from the results of the research

Ethnicity religion and language have been important factors in shaping the

way Mauritians relate to each other in the political and social spheres Despite

the fact that sectarian factors are less of a determining factor in peoples

social and political behaviour they remain an important clue to the peoples

past and self-identity (Rassool 2001) As a foreign investor understanding

the religious belies of a society and taking all the necessary details in to

consideration play a major role in an international business environment

setting (Hosftede 1980) For example observing religious holiday and making

sure employees get days off and annual leaves on such important days

having prayer rooms for those willing to pray at work and creating a non-

discriminatory environment for all employees

It is worth mentioning that while religion does not have a direct impact on

Mauritius investment since it an international business hub However it is

important for investors to take note of all the aspects of religion since it plays a

very important role in lives of the Mauritians For example there are religious

holidays as an employer it is important to follow the religious holiday calendar

and give annual leaves to employees on such important days

46 Social Life

For the interest of prospective investors the study found that the social life in

Mauritius is very much close to families and friends People all meet at open

markets for normal shopping and socialise over weekends ldquoeven ministers

62

managing directors of big companies go to open marketsrdquo [Participant

A12]

There is no busy night life in the country as well as cinema and theatres

because most people prefer home video entertainment ldquoMost people found at

social places like cinemas pubs clubs etc are employees and not

employersrdquohelliphellip [Participant A12] Prospective investors should therefore

know that they are likely to meet business associates at board rooms or at

their offices rather than at social centres

In a society where tolerance is a national virtue and ethnic conflicts are

invisible to the casual visitor it takes time to learn the dos and donts of

socialising ldquohelliphere in Mauritius you must realize that we walk on eggs

continuouslyhelliprdquo [Participant B36] For a peaceful and tolerant as Mauritius

undoubtedly is the diverse groups populating the island do not collectively

make up a nation Mauritius like any other island is a nation of nations and

compromise is the order of the day be it in politics in the economy in the

media or at a dinner party the study found

The study found out that unlike other African societies Mauritius people would

prefer to stay at home and watch movies play video games with kids or visit

friends and relatives to socialise or for a night out There are not many social

night clubs in Mauritius as compared to the United Kingdom ldquohellipmany homes

today have a Digital Video Decoders (DVD) sets and donrsquot see the importance

of going out to cinemas and would helliphelliphelliprdquo [Participant A12]

63

This does not come as a surprise since literature suggests that Mauritius

though it is multicultural society and an international hub for business there

are a quiet peaceful and tolerant nation and would prefer to keep their space

(Stein and Baker 1977)

47 Market Accessibility

The study found that as first foreign investor Mauritius government has open

market programme When the free operational zone initiative began investors

imported raw materials imported duty free and foreign companies had to

show transformation of raw materials into fished exports since the

government‟s aim was to increase exports thus improve balance of trade

However in the early stages the initiative did not work as expected because

of certain barriers

Lack of adequate government incentives to lure more investors

Too much repetition meaning most of the companies where doing the

same thing

Lack of skilled human resources

The scenario is summarised by participant B3 in the following

statementldquohelliphellipour people did not have culture of businessrdquo

For more access to the markets further initiatives were put into place The

government assured investors of freedom of capital movement that is the

investors were guaranteed that they would bring their money into and out of

the country whenever they felt like doing so In addition the government

64

embarked on providing more facilities (industrial buildings) and infrastructures

all over the country opening up rural areas because towns already had

infrastructures Lastly first time investors were provided with free access to

customs thus maintaining the earlier option of tax free imports

While Mauritius was doing all these events elsewhere in the world played to

their favour European Union and USA were imposing import quotas on

Chinese and Indian imports to prevent damping So these investors had to

look for alternative markets and Mauritius turned out to be one of such

markets But the government had to act quickly to avoid bdquotransit investors‟

ldquohellipthey are investors who want to do business when it favours them but when

they begin to loose certain privileges or profits get diminished then they take

offrdquohelliphellip [Participant B3]

To avoid this foreign investors were made to transfer skills and knowledge to

local community which led to emergence of Mauritius community of

manufacturing

ldquowho started from easy stitching like socks pyjamas bras etc and later

upgraded to big Mauritius labelshelliprdquo [Participant B3]

The study further found that the initiative did not stop there The government

further established Mauritius Enterprise Development Investment Authority

(MEDIA) in 1985 which took lead in looking for prospective investors from

65

Europe USA Hong Kong and India among others Any willing investor was

transported to Mauritius and accommodated freely on government accounts to

tour the country and carry out investment feasibility studies This helped to

popularise the investment opportunities in Mauritius and attracted many more

investors Currently MEDIA has been transformed into Mauritius Board of

Investment which is no longer in charge of managing industries but

ldquopromotes Mauritius businesses abroad and participates in trade fairs to

further open uprdquo [participant B3]

The study also found out that there are specific niche markets for foreign

investment in Mauritius namely the Offshore Industry the Financial Industry

the Construction and Tourism especially in the area of high class luxury

property market in form of villas hotels and apartments and of recent the

Information Technology (IT) industry These industries cover a large spectrum

including SMEs

ldquohellipone of these sectors makes a very good investment for any investor

especially the construction industryhelliprdquo [Participant A89]

The results agree with Putz (2000) which notes that niche markets make

establishing a business by immigrants easier because the immigrants needs

for consumer goods create a specific demand This is evidence by all the

incentive the Mauritian government have put in order to attract foreign

investors in to country for the benefit of the Mauritian population Furthermore

Putz (2000) emphasise the opportunities offered by the host country including

66

access to the market and job market conditions as important factors for

international business

48 The role of ICT to SME business in Mauritius

The study found that Mauritius has a very well established ICT sector It has

formed the backbone of SME success in Mauritius As early as 1990 the

country provided hellip ldquothe fastest broadband in the world to help SME business

investors who were each allocated free 2MB internet accessrdquohellip[Participant

A 23] Recently the government has in turn invested a lot of money in

developing a cyber city a few kilometres away from the capital Port Louis

which will form the hub for future investments

This high level of ICT development in the country has created SME in areas

such as offshore financial services calls centres and enhanced tourism

industry growth Any prospective investors are guaranteed of highly

developed ICT backed up by highly qualified local human resources The

offshore investment sector has even been further boosted byhellipldquobilateral

agreements with India allowing companies registered in Mauritius to transfer

funds to India tax freerdquohellip[participant B13]

It is hoped that in helliprdquo5 years time the whole island will have free wifi

connectivityrdquo participant B33 The country not only makes use of its advanced

ICT sector but has become a big player in the region as well For example

Mauritius state informatics computerised South African government in 1996 It

has also won other computerisation contracts in Zambia Zimbabwe Namibia

Kenya and Ghana To sustain such success ldquopartnerships have been formed

67

with global players such as Microsoft to provide training not just to Mauritius

nationals but other scholars from the South Eastern Africa region as

wellrdquohellip[participant B13]As matter of fact the government of Mauritius has

invested billions in building s cyber-city a few miles aware from the capital

Port Louis

ldquoits opening in July this year and it is expected to be the centre of attraction

for investorsrdquo [Participant B13]

ldquoactually the government invested in this cyber-city with the intention to

attract European and American investorsrdquo [Participant A6]

From these results there is evidence that technology plays a major role in

SME development Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

68

48 Governance and the role of women in SME sector

in Mauritius

Mauritius is a multicultural country with ldquo70 of the population of Chinese

Indian ancestry 2 white French origin and the remaining mixed race ndash

creolesrdquo [participant A17] Europe has not have a lot if cultural influence on the

country and predominant cultures are Asian African cultures Study found

that common folklore popular songs in Mauritius would also be ordinary

found on other African countries such as Senegal Mozambique Cameroon

and Sierra Leone among others signifying deep rooted African traditions

The government maintains ndash discrimination laws for either gender In the early

stages of SME development women provided the bulk of the labour in the

rural areas as industries moved away from cities into the rural areas There

are concerted efforts to get women into jobs especially leadership roles

ldquowomen themselves are too slow to act and take advantage of the

government incentivesrdquo

The study found out that woman in Mauritius do not occupy positions of

strategic power decision making This is not a surprise because it is the same

with most Southern African countries The government of Mauritius has put a

lot of structures to support women in business but women are taking it slow to

utilize these structures

69

There are many government agencies and organizations headed by women

and even cabinet posts but most women would rather stay out of politics

becausehelliphellipldquopolitics can get very dirty involving personal lives of politicians

which men donrsquot mind but women do mind a lot aboutrdquohellip[participant A 17)

However in other sectors like education and healthcare there are many

women represented in the labour force

The study also found out that just like any other society one can not ldquohellipstop

some kind of abuse for both males and females There are cases of both

female and male harassment but the law comes in to protect such victims

There are also cases of petty crime and rape involving women either as

perpetrators or victimsrdquohellip [Participant A13]

According to AllAfrica Global Media (2008) the winds of change are blowing

across the island of Mauritius and many men in this traditionally conservative

nation are working hand in hand with women to see that the common sense of

gender equality prevails The absence of women at the decision-making table

usually means the absence of their priorities and needs Irrespective of the

Southern African Develoment Community (SADC) Declaration there are so

few women in politics This is evident from the results of the study which found

that women will rather do health jobs and education than to play the dirty

tricks of politics

Women councillors make up a mere 37 in the Moka-Flacq District Council

This is the lowest figure not only in Mauritius but also in the SADC region

70

This is far from the 2005 30 target not to mention the 50 goal now being

set for the region and included the draft Protocol on Gender and Development

up for review at the August SADC Heads of State Summit ( AllAfrica Global

Media 2008)The results found out that there is also a few representations of

women in business Women do mostly the dirty jobs of caring for children and

their families and do not have the courage to enter the business sector This is

not surprising especially in the SADC region women play the minority role

and are rarely represented at the strategic decision making level hence their

needs are always neglected resulting in women poverty

49 Challenges faced by the country and hence SME investors

Stiff competition from other countries such ashelliphellipldquoBotswana Vietnam and

South East Asia in the textile industry due to cheap labour Maldives and the

Caribbean Islands for tourism difficult in Training enough qualified personnel

in ICT to cope with demand International competition and access to fundsrdquo

hellip[participant B13]

To face these challenges the study found that the country has expanded

tertiary education and formed partnerships with foreign universities such as

ldquoFrench Scientific University which has been running Medical school in

Mauritius for 10 years By the time of this study an agreement had been

reached by Thames valley university (UK) to open up campus in

Mauritiusrdquohellip[participant B15] The aim of the government is to offer high

quality education to students from the region as well as far away like China at

affordable cost and to compete with European universities Further to

71

educational development the study also found out that the country is striving

to create partnerships with ldquoresearch organisations and to create high quality

healthcare so as to benefit from health tourism where would just travel to the

country to get affordable high quality specialised health carerdquohelliphellip [Participant

A3]

Finally results show that there is stiff competition from different sectors of

business and other force which needs to be taken into consideration when

doing business internationally Globalization tends to redistribute economic

rewards in a non-uniform manner a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) It essential to know all

the factors surrounding the business sector and understanding all the

business practices before investing to avoid any loss

72

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

Research on culture and IB is definitely a bdquogrowth‟ area because the business

world is in many ways becoming one The researcher concluded the following

based on study findings

Firstly the cultural diversity and harmony of the island make Mauritius a

unique place in the world It is also known for its social peace political stability

and racial harmony Its steady economic growth over the years coupled with

its nation‟s social cohesion and prosperity ensure continuing development

Secondly Mauritius enjoys a literacy rate over 80 percent Skilled labour

graduates and qualified professional including lawyers engineers IT

programmers consultants accountants and chartered secretaries are

available to suit virtually all business needs in two international languages

English and French Language is therefore not a barrier to foreign investment

In addition academic training at the University of Mauritius and the newly

established University of Technology a comprehensive system of vocational

training through the Industrial and Vocational Training Board (IVTB) ensures a

ready supply of skills in a number of fields such as tourism engineering

electronics jewellery ICT printing and textiles

Thirdly In view of the importance of foreign investment as a source of

sustenance to economic growth the government of Mauritius has taken a

series of policy measures to encourage its flows into manufacturing offshore

73

banking and financial services information technology communication and

tourism As far as foreign investors are concerned Mauritius offers itself as an

attractive destination because several positive features such as political

stability availability of skilled labour and investment-friendly rules and

institutions

Fourthly after a sustained growth path over the last three decades based on

sugar textiles and tourism Mauritius is now shifting gears to move towards a

higher stage of economic development so as to consolidate its position as a

premier international hub Foreign Direct Investment (FDI) has played an

important role in the development of Mauritius and will again be decisive when

the country embarks on high value-added capital intensive and knowledge-

based activities

Fifthly the government plays the role of a facilitator and has endeavoured at

all times to create the most conducive investment environment by enacting

appropriate legislations building state-of-the-art infrastructure investing in

human capital and introducing packages of investment incentives for the

manufacturing financial services and ICT sectors so as to enhance the image

of Mauritius

In this respect the Board of Investment (BOI) is the first contact point for

anyone investing in Mauritius Operating under the aegis of the Ministry of

Finance the BOI was established in March 2001 under the Investment

74

Promotion Act to give a new impetus to foreign direct investment The BOI is

the apex organization for the promotion and facilitation of investment in

Mauritius The primary role of BOI is to stimulate the development expansion

and growth of the economy by promoting Mauritius as a competing business

and service centre It aims at streamlining the legal framework and to make

better provision for the promotion and facilitation of investments in Mauritius It

acts as a facilitator and provides a one-stop shop service to both local and

foreign investors ensuring reliable and speedy processing of applications The

BOI receives processes and approves all applications for investing in

Mauritius It also assists investors in obtaining the necessary secondary

permits and clearances from relevant authorities thus ensuring a speedy

implementation project

Six Mauritius pursues a liberal investment policy and actively encourages

foreign direct investment in all sectors of the economy Attractive packages of

both fiscal and non-fiscal incentives tailor-made to the needs of each priority

area of development are offered to investors Excellent opportunities for

investment in Mauritius exist in various sectors of the economy including

manufacturing information technology knowledge industry regional

headquarters tourism and leisure financial services Freeport activities

amongst other sectors Some of the priority areas are in Information and

Communication Technology which is set to a play a lead role in the economic

development of the country in the medium and long terms The availability of

high bandwidth connectivity (with SAFE Project and international Gateways)

at near global parity in quality and tariff on the one hand and the setting up of

75

dedicated IT habitats including the Cyber city at Ebeacutene on the other hand

plus total Government support to this industry are testimony of the importance

of this industry to Mauritius Others include the manufacturing sector textiles

and apparel the spinning sector electronics and light engineering medicals

and pharmaceuticals agro-business leather products and jewellery and

watches

The export-oriented manufacturing sector has been the backbone of the

Mauritian economy for the past three decades This sector remains a major

constituent of the Mauritian economy in terms of foreign exchange earnings

employment and contribution to GDP and is called upon to continue to play

an important role in the consolidation and diversification of the industrial base

of the country certain

Lastly some incentives provided by government to foreign investors In the

manufacturing sector these include among others

No customs or duty or sales tax on raw materials and equipment

No tax on dividends

No capital gains tax

Free repatriation of profits dividends and capital

50 relief on personal income tax for expatriate staff

New incentives for the ICT Sector consist inter alia of

the availability of tax holiday up to year 2008 for specified

pioneering high-skills ICT operators typically geared towards the

export market such as software development multi-media and to

high-level ICT training institutions

76

customs duty-free import of ICT and similar equipment

50 relief of personal income tax for a specified number of foreign IT

staff

duty-free import of personal belongings of foreign IT staff

effective fast track procedure for procession of visa and work

permits for foreign staff including spouses

From the above the research concludes that Mauritius being a multicultural

society as it is the culture they share does not have a direct impact on

investment in Mauritius because of it is an international hub for business It is

also expected that from the results the situation is not going to change after

time but will keep in this shape for a long since it is the government incentive

to attract more investors into the country However there are certain aspect of

culture eg believes that foreign investors need to understand and take into

consideration This study recommends any prospective investor to make good

investment in to Mauritius without fear

77

CHAPTER SIX

REFLECTIONS FROM THE STUDY

The views derived from this study might not be directly applicable to the whole

region because of variations in socioeconomic settings in various parts of the

Mauritius Also views expressed in this study were obtained mainly from

urban based managers and respondents and might not be similar to rural

based SMEs from the same community or area

Some scholars might not support the sampling techniques used but they

were the most practicable given the circumstances

Legal practitioners in Mauritius were supposed to be part of the sample but

they were hard to reach with some declining to participate

Demographically and geographically the sites were larger than anticipated

given the time and resources available for the study

Lastly the study was limited to the previous 20 years which might have

yielded same generational trend missing the opportunity to get data across

various generations within the sites

78

CHAPTER SEVEN

FUTURE RESEARCH

With more funding and resources a similar study could be conducted

throughout a wider geographic region and encompassing all categories of

SMEs micro small and medium Furthermore with more time a greater

number of interviews could be conducted which would provide richer data that

would be more in depth for conclusive analyses to be made Additionally

participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

79

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

WORD COUNT 16 969

80

APPENDICES APPENDIX 1 MauritiusData Profile

2000 2005 2006

World view

Population total (millions) 119 124 125

Population growth (annual ) 10 08 08

Surface area (sq km) (thousands) 20 20 20

Poverty headcount ratio at national poverty line ( of population)

GNI Atlas method (current US$) (billions) 444 653 681

GNI per capita Atlas method (current US$) 3740 5250 5430

GNI PPP (current international $) (billions) 891 1239 1334

GNI per capita PPP (current international $) 7510 9970 10640

People

Income share held by lowest 20

Life expectancy at birth total (years) 72 73 73

Fertility rate total (births per woman) 20 20 20

Adolescent fertility rate (births per 1000 women ages 15-19) 39 40 41

Contraceptive prevalence ( of women ages 15-49)

Births attended by skilled health staff ( of total) 100 99

Mortality rate under-5 (per 1000) 18 15 14

Malnutrition prevalence weight for age ( of children under 5)

Immunization measles ( of children ages 12-23 months) 84 98 99

Primary completion rate total ( of relevant age group) 105 97 92

Ratio of girls to boys in primary and secondary education () 98 100 103

Prevalence of HIV total ( of population ages 15-49) 06

Environment

Forest area (sq km) (thousands) 04 04

Agricultural land ( of land area) 557 557

Annual freshwater withdrawals total ( of internal resources)

Improved water source ( of population with access) 100

Improved sanitation facilities urban ( of urban population with access) 95

Energy use (kg of oil equivalent per capita)

CO2 emissions (metric tons per capita) 23

Electric power consumption (kWh per capita)

Economy

GDP (current US$) (billions) 447 629 635

GDP growth (annual ) 40 46 35

Inflation GDP deflator (annual ) 37 48 41

Agriculture value added ( of GDP) 6 6 6

Industry value added ( of GDP) 31 28 27

Services etc value added ( of GDP) 63 66 68

Exports of goods and services ( of GDP) 63 57 60

Imports of goods and services ( of GDP) 65 61 67

Gross capital formation ( of GDP) 26 23 25

Revenue excluding grants ( of GDP) 220 214 215

Cash surplusdeficit ( of GDP) -11 -21 -30

States and markets

Time required to start a business (days) 46 46

Market capitalization of listed companies ( of GDP) 298 416 567

Military expenditure ( of GDP) 02 02

Fixed line and mobile phone subscribers (per 100 people) 39 82 90

Internet users (per 100 people) 73 241 145

Roads paved ( of total roads) 97

High-technology exports ( of manufactured exports) 1 2 24

Global links

Merchandise trade ( of GDP) 82 84 91

Net barter terms of trade (2000 = 100) 100 109 115

External debt total (DOD current US$) (millions) 1713 2153 1997

Short-term debt outstanding (DOD current US$) (millions) 767 1363 1363

Total debt service ( of exports of goods services and income) 181 72 71

Foreign direct investment net inflows (BoP current US$) (millions) 266 39 107

Workers remittances and compensation of employees received (US$) (millions)

177 215 215

Official development assistance and official aid (current US$) (millions) 20 34 19

Source World Development Indicators database April 2008

81

APPENDIX 2

SUMMARY GENDER PROFILE (Mauritius)

Mauritius

Sub-Saharan Africa

Upper middle income

1980 1990 2000 2004 1980 2004 1980 2004

GNP per capita (US$) 1210 2300 3690 4640 652 601 2391 4769

Population

Total (millions) 10 11 12 12 3850 7258 4394 5762

Female ( of total) 507 501 502 503 503 501 515 514

Life expectancy at birth (years)

Male 63 66 68 69 47 46 63 66

Female 69 73 75 76 50 47 71 73

Adult literacy rate ( of people aged 15+)

Male 848 884 954

Female 750 805 942

LABOR FORCE PARTICIPATION

Total labor force (millions) 0 0 1 1 157 299 193 256

Labor force female ( of total labor force)

37 34 34 35 43 42 42 41

Unemployment

Total ( of total labor force)

33 88 102 12

Female ( of female labor force)

36 96 126 134

EDUCATION ACCESS AND ATTAINMENT

Net primary school enrollment rate

Male 91 96 94 68

Female 92 97 96 60

Progression to grade 5 ( of cohort)

Male 97 99

Female 98 99

Primary completion rates ( of relevant age group)

Male 61 105 98 66 95

Female 63 104 102 56 96

Youth literacy Rate ( of people aged 15-24)

Male 912 937 978

Female 911 954 974

HEALTH

Total fertility rate (births per woman)

27 23 20 20 67 53 31 20

Contraceptive prevalence ( of women aged 15-49)

75 26 76 22 69

95

82

APPENDIX 3

DATA COLLECTION FORM FOR THE SURVEY Sitehelliphelliphelliphelliphellip Participant numberhelliphelliphelliphellip MANAGING DIRECTOR CEO MANAGER

Age group -25 26 ndash 35 36 - 45 46-55 56-64 65+

Education Nursery ndash Standard 4

Std 5 ndash 7 (8) Form 1 ndash 2

Form 3 ndash 4 or A level

College University

Employment Yes No Business (what type)

Partnership Whole Citizen

Joint Venture

Age of Company

1-3 years 4-6 years 7-10 years

11-15 Above 15yrs

Number of Employees

10-25 50-99 100-149 150-200

Place of birth

In the constituency

Outside the constituency

Where

Residence Rural Urban Where

Before starting business

After business

Children

Boys Number

Girls Number

Any born a Yes None

Are they in school

Yes No Some

Working Yes No Some

Annual Sales

Balance Sheet

Less than R1000000

R101 000- 250 000

R251 000- 15 million

R 15 million +

Years Employed as CEO

0-3 4-7 8-14 15-19 Over 20 years

83

APPENDIX 4 Qualitative data questionnaire The following questions were used as a guide during the focus group discussions However they were not followed in the strict order or wording as they appear here

SOCIAL INCLUSION EXCLUSION

I am going to ask you questions regarding support you think the society could give foreign investors There is no right or wrong answers it is just about your opinion

a) How do you feel about foreign investors coming to Mauritius

b) How has your friendship with foreign business before and after they arrive in Mauritius

c) Do you keep in touch with foreign businesses around you and prospective investors

d) In your opinion how does foreign business feel about Mauritius

e) Are foreign businesses doing well or badly

f) What support structures or government incentives are there for foreign investors

g) What kind of support would you like to receive from the government

BUSINESS ATTITUDE AND BELIEFS

I am now going to ask you some general questions about business and your opinions about it

a) How would you describe the general business environment

b) Do you find it difficult to do business with people from different countries of the world Why

c) What do you believe the first thing to do on the morning before opening

your business (Local people) Why

d) How best can the Mauritius people be motivated into business How do you get over them

84

e) What areas do local people consider as niche areas for foreign

business

f) How do local people organize their business Why

g) As a local business person what would you consider as abomination of business in Mauritius Why

h) What is the role of women in the business sector

CULTURE

I am now going to ask you questions about the your culture

a) What are your views about business culture in Port Louis

b) What are the challenges of national culture on business practices in your opinion

c) What are the benefits of culture on business practice

d) Do you think foreign investors need to know the local language when investing in Mauritius

e) If you were to advice a foreign investor what would you want them to know about Mauritius

f) How do you think the family daily practice influences business in

Mauritius

g) What business actions of behaviors are sensitive to the local people

h) How best can foreign investors assimilate with the local business people

i) What do local people like to buy on weekends week days public religious holidays

j) What marketing strategies violet the culture of Mauritius ndashwomen naked Eating behavior Etc

85

APPENDIX 5

Introductory letter consent form

TITLE CULTURE AND INTERNATIONAL BUSINESS

ENTREPRENUERSHIP A CASE STUDY OF MAURITIUS

INTRODUCTION

I am Angelinah Boniface a student pursuing Masters of Science in

Information Systems the University of Sheffield United Kingdom I am

conducting a study on the Impact of culture on small and medium

enterprises for my dissertation The study is expected to last 3 months and a

report of the findings will be availed to all interested stakeholders including the

university as part of course requirements

PURPOSE OF THE STUDY

This study is intended to gain insight into views and opinions about

widowhood and inheritance in relation to health and well being of participants

and the community at large Evidence from this study may be useful in future

government and development agencies‟ planning and provision of relevant

interventions for the benefit of the whole community

VOLUNTARINESS AND CONFIDENTIALITY

Your participation in this study is purely voluntary and you can withdraw

at any time should you feel uncomfortable to proceed Information obtained

from this study will be used for no any other purpose other than the

dissertation It will be kept confidential only accessible to the researcher and

pseudonyms will be used to ensure anonymity and confidentiality of

participants and location The researcher will strive to treat all participants

with dignity respect equality and minimise possible harm that might arise

from the study

Agreeing to take part in this study will be treated as your consent to be

involved in this research BUT YOU HAVE THE RIGHT TO WITHDRAW

THE CONSENT

86

RISKS AND BENEFITS

There are no risks to the questions that will be asked If at any point you feel

uncomfortable to answer any question please feel free to ignore such to avoid

any harm

There is likely to be no immediate benefits to you as a participant However

the information obtained in this study will go a long way in informing the

younger generation and wider audience about the culture It might also be

used by the government and other development agencies to plan for

interventions relevant to the needs of widows in your community in the future

based on the evidence you have provided in this study

CONTACTS

The researcher can be contacted at +44 0791263163 lip07acbshefacuk

or linabonyahoocom in case of any questions issues

In case of any problems that need university attention my supervisor can be

contacted at kalbrightshefacuk

PLEASE DONrsquoT TAKE PART IN THIS STUDY IF YOU ARE BELOW 18

YEARS OF AGE

Thank you very much for your anticipated cooperation

Researcher‟s signature Participant‟s signature

helliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

87

REFERENCES

Bhagat RSet al (2002) Cultural variations in the cross-border transfer of

organizational knowledge an integrative framework Academy of

Management Review 27(2) 204ndash221

Boyacigiller NA amp Adler NJ (1991) ldquoThe parochial dinosaur organizational

science in a global contextrdquo Academy of Management Review 16(2) 262ndash

290

Bowling A (ed) (2002) Research methods in health Investigating health and

health services Buckingham Open University press

Dabee R and Greenway D (2001)The Mauritian Economy A Reader

PalgraveNew York

Dawson C D (2002) Practical research methods A user friendly guide to

mastering research techniques and projects Oxford How to Books Ltd

Denscombe M (ed) (2007) The good research guide for small scale social

research projects Berkshire Open University Press

Denscombe M(ed) (2003) The good research guide For small scale social

research projects Maidenhead Open University Press

Economic And Social Research Council (2005) ESRC research ethics

framework [online]

httpwwwesrcsocietytodayacukESRCInfoCentreopportunitiesresearch5

Fethics5Fframework [ Accessed May 05 2008]

88

Gilbert N (ed) (2001) Researching social life London Sage Publishers

Grbich C (1999) Qualitative research in health An introduction London

Sage publications

Hunter D amp Lang T (1993) The Leeds declaration Leeds Nuffield Institute

for Health

Neuman L W(ed) (2000) Social research methods qualitative and

quantitative approaches Needham Heights MA Allyn amp Bacon

Maynard M amp Purvis J (1994) Researching womens lives from a feminist

perspective London Taylor and Francis group

Muuka GN (2002) Africas informal sector matters a challenge to scholars

to close the knowledge gap Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

Business and Development International Conference Port Elizabeth April 3-

6 pp1-6

Southwood R (2004)The impact of ICT on SMEs ndash a motor for future

economic growth in hard-pressed times [Online] Balancing Act news update

wwwbalancingact-africacomnewscurrent1html [Accessed 26 January

2008]

Machacha L (2002) Impact of information technology on small and medium

enterprises (SMEs) in Botswana Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

89

Business and Development International Conference Port Elizabeth April 3-

6 pp277-82

Organisation for Economic Co-operation and Development (OECD)

(2000)OECD study highlights role of small and medium enterprises in job

creation Organisation for Economic Co-operation and Development

[Online]wwwoecdorgmediapublishpb00-11ahtm [Accessed 8 July 2008]

Commonwealth Secretariat UK (2006) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius London Commonwealth

Secretariat

Reed DM (1998) Using the Business Excellence Model in Small Service

Business British Quality Foundation

Taylor AW amp Adair RG (1994) ldquoEvolution of Quality awards and self

assessment practices in Europe a case for considering organisation sizerdquo

Total quality Management 5 (4) 227-237

United Nations (1993) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

Johanson J amp Wiedersheim-Paul F (1995) The Internationalization of the

Firm - Four Swedish Cases Journal of Management Studies 20 (3) 123-139

90

Chui ACW Lloyd AE and Kwok CCY (2002) The determination of

capital structure is national culture a missing piece to the puzzlerdquo Journal of

International Business Studies 33(1) 99ndash127

Earley PC amp Gibson CB (2002) Multinational Teams A New Perspective

Lawrence Earlbaum and Associates Mahwah NJ

Gibson CB (1999) ldquoDo they do what they believe they can Group-efficacy

beliefs and group performance across tasks and culturesrdquo Academy of

Management Journal 42(2) 138ndash152

Hofstede G (1980) Cultures Consequences International Differences in

Work-Related Values Sage Newbury Park CA

SMIDO (2006)A new Vision For SMEs Development Mauritius

Government Printer Port Louis

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Stone A (1997) SMEs and Technology why should we make special efforts

to help World Bank

Bhagat RS et al (2003) Knowledge in Cross-Cultural Management in Era

of Globalization Where Do we Go from Here in D Tjosvold and K Leung

91

(eds) Cross-Cultural Management Foundations and Future Ashgate Englan

155ndash176

Cairncross F (2001) The Death of Distance Harvard Business School Press

Boston MA

Commonwealth Secretariat UK (2005) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius Commonwealth Secretariat

Drucker PF (1995) Managing in a Time of Great Change Truman Talley

BooksDutton New York

Guilleacuten M (2001) ldquoIs globalization civilizing destructive or feeble A critique

of five key debates in the social science literaturerdquo Annual Review of

Sociology 27 235ndash260

Gibson CB and Cohen SG (2003) Virtual Teams that Work Creating

Conditions for Virtual Team Effectiveness Jossey-Bass San Francisco

Grazol P et al(2004) ldquoThe Effect of Culture on IT Diffusion Email and Fax in

Japan and the US Information Systems Researchrdquo Journal of International

Consumer Marketing 16 4 pp 29-64

Greider W (1997) One World Ready or Not Crown Business New York

92

Gertler MS (1997) The Invention of Regional Culture In Lee R and Willis J

eds Geographies of Economies London Arnold

Govindarajan V and Gupta AK (2001) The Quest for Global Dominance

Transforming Global Presence into Global Competitive Advantage Jossey-

Bass San Francisco

Haire M et al(1966)Managerial Thinking An International Study Wiley

New York

Heuer M et al(1999) Cultural stability or change among managers in

Indonesia Journal of International Business Studies 30(3) 599ndash610

Hofstede G (1997) Cultures and Organizations Software of the Mind New

York McGraw-Hill

Hofstede GH (2001) Cultures Consequences Comparing Values

Behaviors Institutions and Organizations Across Nations London Sage

Publications

Hoecklin L (1995)Embedded Autonomy States and Industrial

Transformation Princeton NJ Princeton University Press

93

IBP USA (2002) Mauritius Investment and Business Guide IB Tauris and Co

LTD London

Kerr C et al (1960) Industrialism and Industrial Man Harvard University

Press Cambridge MA

Kirkman BL amp Shapiro DL (2000) ldquoUnderstanding why team members

won‟t share an examination of factors related to employee receptivity to team-

based rewardsrdquo Small Group Research 31(2) 175ndash209

Lisenda L (2003) Small and medium-scale enterprises in Botswana their

characteristics sources of finance and problems BIDPA Gaborone

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Meredith GG (ed) (2004) Small Business Management in Australia

McGraw-Hill Sydney

Mistry PS (1999) ldquoCommentary Mauritius ndash quo vadisrdquo African Affairs 98

(393) 551ndash69

Mullins LJ(ed) (1999) Management and Organizational Behavior 5th ed

London Financial Times Pitman

94

Myers MDamp Tan FB (2002) ldquoBeyond Models of National Culture in

Information Systems Researchrdquo Journal of Global Information Management

10 (1) 112-134

Putz R (2000) ldquoCulture and entrepreneurship views from the middle and

lower level managersrdquo Journal of Business Ethics 22 145- 153

Scottish Economic Statistics Scottish ExecutiveONS IDBR (2005)Size

Analysis of Welsh Business SDR 692004Statistical Press Release URN

0440

Straub D et al (2002) rdquoTowards A Theory-Based Measurement of Culture

Journal of Global Information managementrdquo 10 (1)

Schaeffer RK (2003) Understanding Globalization The Social

Consequences of Political Economic and Environmental Change Rowman amp

Littlefield Lanham MD

SMIDOA new Vision For SMEs Development(May 1996)

SMME Task Force Report (1998) Small medium and micro-enterprises task

fore force report Government Printer Ministry of Commerce and Industry

Sondergaard M amp Hofstede G (1994) ldquoA study of Reviews Citations and

Replicationsrdquo Organization Studies 15 (3) 447-456

95

Schein EH (1992) Organizational Culture and Leadership Jossey-Bass

San Francisco

Stone A ( 1997) SMEs and Technology why should we make special efforts

to help (World Bank 1997)

Statistical Press Release (2005) URN 0592 Office for National Statistics

Weisinger JYamp Trauth EM (2002) ldquoSituating Culture in the Global

Information Sectorrdquo Information Technology amp People 15 (4) 306-320

United Nations (2005) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

3

National culture has been shown to impact on major business activities from

capital structure (Chui et al 2002) to group performance (Gibson 1999) For

reviews see Boyacigiller and Adler (1991) and Earley and Gibson (2002)

Weisinger and Trauth (2003) report that culture evolves and takes unique

forms in local offices of organizations This means that culture is both dynamic

and situated in its local context Thus external conditions both structural and

cultural can influence global business Yet small and medium enterprise

(SMEs) managers can have an impact on how their organizations‟ cultures

evolve Therefore strategic leaders need to introduce unique norms values

and processes that fit together coherently in successful organizations

Therefore the main purpose of this case study is to explore and understand

the Small Medium Enterprise (SMEs) business environment in Mauritius and

how SMEs can penetrate the business culture there

The purpose of this paper is therefore to explore and understand how national

culture influences international business decisions and how to culture affects

international business investment using Mauritius as a case study

In this chapter the author outlines the background of the study specifies the

study objectives describes the significance of the study gives methodological

overview and finishes off by outlining definitions of key terminologies

4

11 Background to the Study

Strategically located in the Indian Ocean at the crossroads of Africa and Asia

Mauritius is reputed for its beautiful countryside and its 150 kilometres of white

sandy beaches and transparent lagoon A British colony that gained

independence in 1968 officially known as Republic of Mauritius the country is

positioned to the east of the Madagascar Islands The geographical

coordinates of the nation are 20ordm17 South latitude and 57ordm33 East longitude

The total area covered by the island nation is 2040 square kilometres

Mauritius enjoys a maritime sub-tropical climate and is therefore an all-year-

round holiday destination From a monocrop economy depending mainly on

sugar it has diversified its economic activities into textile and apparel

industry tourism and financial service Mauritius has witnessed a massive

development in the last decades (SMIDO 2006)

5

Figure 1 Map of Mauritius showing all Provinces

Source Encarta World atlas online

6

Figure 2 Mauritius map showing political divisions of the country

Source Maps of the world online

The research area was around the capital city Port Louis marked in red For

anonymity the site was just called A or B Administratively Mauritius is divided

into nine Provinces (figure 2)

The country is remarkable in its ethnic diversity It forms a unique mosaic of

immigrants from the Indian sub-continent Africa Europe and China The

cultural diversity and harmony of the island make Mauritius a unique place in

the world The various religions found on Mauritius tend to play a major part in

7

the islands cultural events and churches temples and mosques are to be

found everywhere Hindus make up approximately half of religiously affiliated

Mauritians followed by Muslims and Christianity as the minority It is also

known for its social peace political stability and racial harmony Its steady

economic growth over the years coupled with its nation‟s social cohesion and

prosperity ensure continuing development (Country Profile 2005)

The country is equipped with a highly skilled labour force to suit virtually all

business in two international languages English and French and a very good

infrastructure thereby attracting Foreign Direct Investment The average

economic growth was 56 over the last 3 years The income per Capita has

reached 4000 US Dollars As a result the standard of living has gone up The

country has now a life expectancy rate of 714yrs an adult literacy rate of 83

(Country Profile 2005)

To face globalisation and a new economic environment the Government has

taken several steps High value-added capital intensive and knowledge-

based activities are on the priority list The Information Technology sector is

undergoing rapid changes so as to be fit for the next millennium The aim is to

make Mauritius a centre for high-tech and software services which can be

exported (Commonwealth Secretariat 2006)

8

12 An Overview of Mauritian Economy

The economy of Mauritius has experienced major structural transformation

over the last two decades The country has moved away from a mono-crop

economy with fast population growth high unemployment and low per capita

income to one that is more dynamic and diversified The sources of

diversification have been agriculture export manufacturing (mainly textile)

tourism and more recently international services with Offshore and Freeport

activities (Country profile 2005)

To respond to the global competition in these sectors Mauritius has made

extensive use of modern technology to improve its productivity and efficiency

The real growth rates have been around 54 over the past four years and

Mauritius is now classified as a middle-income country and is one of the

healthiest economies in the whole African region (Country profile 2005) The

sugar sector provided the start-up capital for the Export Processing Zones

(EPZ) The rapid rate of growth of investment in the manufacturing sector

(investment grew by over 30 each year from 1983 until the late 1990s in this

sector) that led to the success of the EPZ and the Mauritian economy as a

whole This was made possible by the confidence of entrepreneurs and

foreign investors prevailing in the country at that particular time The private

sector accounts for approximately 70 of total capital formation in Mauritius

Investment rate stood around 27 in the four years ending 1996 peaking to

30 in 1994 (SMIDO 1996)

9

When the government recommended the diversification of the economy with

the creation of Export Processing Zones in the early 1980‟s the EPZ sector

benefits from duty-free and quota free access into European Union markets

granted under the Lomeacute Convention as well as tariff preferences granted

under the General System of Preferences (GSP) by countries such as North

America and Japan The mid 1980s witnessed a textile boom raising per

capita incomes and living standards However the conclusion of the Uruguay

Round (General Agreement on Trade amp Tariffs) implies the loss of guaranteed

markets and preferential access which will result in strong competition in

these respective markets (Country profile 2005)

The new strategy of the industrial sector aims at targeting high quality and

high value added products with a view to restoring the competitiveness of the

goods by applying latest technology to the manufacturing industry and hence

improving the quality of the finished products Limited data is available

regarding the SME sector in Mauritius The current research has observed

that there is little research in the field in SME sector in Mauritius

In view of the importance of foreign investment as a source of sustenance to

economic growth the government of Mauritius has taken a series of policy

measures to encourage its flows into manufacturing offshore banking and

financial services information technology communication and tourism As far

as foreign investors are concerned Mauritius offers itself as an attractive

destination because several positive features such as political stability

10

availability of skilled labour and investment-friendly rules and institutions

(Stone 1997)

With such a promising economy there is virtually no evidence on how to

penetrate the business culture in Mauritius and how culture can affect SMEs

and business opportunities therefore this study will explore and understand

the business environment in Mauritius and the challenges of doing business

there as a foreign investor Currently there is very little research done on

SMEs and culture in Mauritius

13 Mauritius SME Background

Experience shows that attitudes towards small business vary from decade to

the next from country to country Before the industrial revolution all business

was small business but with industrial and commercial expansion of

developed nations small has become medium and medium has become big

business

Business owners and managers have often seen growth as an end in itself

and at time the cry get big or get out has been heard in most nations

(Meredith 2004) For more than two decades SMEs have experienced

favourable growth SME has long been prominent in the countrys economy

and make up a large portion of national economy in terms of output

employment and effective utilisation of regional resources Small and medium

enterprises in Europe make up 998 of all European enterprises provide

66 of its jobs and account for 65 of its business turnover (Meredith 2004)

11

In developing countries SMEs account more than 90 of all enterprises

Over the last five years they have been responsible for more than 80 of job

created (Stone 1997) On the issue of job creation Stone (1997) found that

SMEs create more employment than large enterprises and with a lower

investment per job created SMEs are not usually associated with international

activity but they do in fact play a significant international role and their

importance appears to be increasing Available data on SMEs international

activity are very limited (Stone 1997)

In general terms and depending on the country SMEs contribute between

15 and 50 of exports and between 20 and 80 of SMEs are active

exporters Overall it is estimated that SMEs now contribute between 25 and

35 of world-manufactured exports (UN 2005) Increased exports not only

boost the level of sales and employment but also extend the life cycle of

goods and services

In Mauritius SMEs represent 19 according to a report issued by the

Commonwealth Secretariat entitled a Study of Small Firm export Policies

and Institutions in Mauritius Subsequently these SMEs have developed

gradually and move from their tradition orientated operations to export-led

firms probably due to improvement of technology in the field of communication

and the new economic dimension which prevailed

At this juncture it is important to report that few studies on culture and small

and medium entrepreneurship have been conducted on Sub-Saharan Africa

12

There is a paucity of information and even those scarce studies they do not

cover broad perspectives of the situation of SMEs in Sub-Saharan Africa

Therefore this study builds upon the existing limited body of research

regarding how business cultures contribute to the success or failure of small

and medium entrepreneurs In particular it explores the business culture in

Mauritius and its barriers to penetration for new and foreign small and

medium entrepreneurs

14 Purpose Statement

The purpose of this study was to understand the concept on how to penetrate

an international business culture and the challenges that comes it using a

grounded theory research design The case study explored and understood

how cultural differences affect small and medium enterprises in Mauritius

business opportunities and how to penetrate the business culture in Mauritius

15 Aims and Objectives

To investigate the challenges of national cultural differences in

business in Mauritius

To investigate how to penetrate the business environment for a new

and or foreign business culture especially in Mauritius

To investigate business opportunities for SMEs in Mauritius and how

these can benefit the locals

13

16 Research Question

How can Small and Medium Enterprises penetrate the business culture in

Mauritius

These sub-questions all pertain to SMEs business

o 161 SUB-QUESTIONS

What kind of businesses are operating in Mauritius now

What are their business strategies (marketing brands) etc

What are the necessary mechanisms for establishing business in

Mauritius

What are the business needs of established and starting businesses

What are the mechanisms for potential growth of local business

What are the challenges for doing business in Mauritius

How much of business behaviour is influenced by the national culture

17 The Significance of the Study

The findings of the current study will increase the understanding of cultural

barriers to market penetration for SMEs in Mauritius The study adds

knowledge to the body of literature in this area focusing at further

improvement of understudying of culture and business issues The

study becomes part of the universitys education development in line with its

obligations to the communities and the country This research problem arose

from an information need of a particular client This research therefore will try

to explore the client‟s information need and probably contribute to the wealth

of knowledge

14

18 Definitions

CULTURE Hofstede (1997) defines culture as ldquothe collective programming of

the mind which distinguishes the members of one group or category of people

from anotherrdquo It is the norms beliefs and values common to a society

Culture is about the way people understand their world and make sense of it

It only when this is taken for granted assumptions are challenged that people

realise that they even exist (Hofstede 1997)

ENTERPRISE An enterprise is considered to be any entity engaged in an

economic activity irrespective of its legal form This includes in particular

self-employed persons and family businesses engaged in craft or other

activities and partnerships or associations regularly engaged in an economic

activity (European Commission 2003)

INTERNATIONAL BUSINESS International business consists of transactions

that are devised and carried out across national borders to satisfy the

objectives of individuals and organizations The Primary Types of International

Business Activities Are Importing and Exporting Direct Foreign Investment

(Govindarajan and Gupta 2001)

GLOBALISATION refers to a bdquogrowing economic interdependence among

countries as reflected in the increased cross-boarder flow of three types of

entities goods and services capital and knowhow‟ (Govindarajan and Gupta

2001 4)

15

SMALL AND MEDIUM INTERPRISES (SME) is made up of enterprises

which employ fewer than 250 persons and which have an annual turnover not

exceeding EUR 50 million andor an annual balance sheet total not

exceeding EUR 43 million (European Commission 2003)

In Mauritius an SME has been redefined taking into account the volume of

investment in equipment which was previously one million up to 10 millions

Mauritian Rupees presently to be classified as a small enterprises and with

less than 50 and 200 employees for small and medium scale respectively

(Stone 1997)

16

CHAPTER TWO

LITERATURE REVIEW

The aim of this chapter is to introduce conceptual themes that are important in

order to understand the role of culture in international business The chapter

discusses the context of relationship between culture and international

business practices in small and medium enterprises (SMEs) and the major

challenges they face in the area of globalisation A model adopted from Putz

(2000) forms a framework for articulating the conceptual role that culture has

in international business using Mauritius as a case study

21 Embracing Cultural change in an era of globalization

A significant theoretical issue for international business is the role of culture in

the whole aspect of information transformation Since the landmark study by

Haire et al (1966) and the publication of Industrialism and Industrial Man by

Kerr et al (1960) researchers have continued to search for similarities in

culturally specific beliefs and attitudes in various aspects of work related

attitudes as well as consumption patterns and other behaviours If cultures of

the various communities of the world are indeed converging (Heuer et al

1999) International Business (IB) related practices would likely become

increasingly similar For example standard culture-free business practices

would emerge and inefficiencies and complexities associated with divergent

beliefs and practices in the past era may disappear (Heuer et al 1999)

17

Studies elsewhere suggest that culture gets affected by globalization practices

in the current 21st century Globalization has seen flows of information

technology money and people and is conducted via international

government organizations such as the African Union the North American

Free Trade Agreement (NAFTA) and the European Community global

organizations such as the International Organization for Standardization

(ISO) multinational companies (MNCs) Also includes cross-boarder alliances

in the form of joint ventures international mergers and acquisitions These

interrelationships have enhanced participation in the world economy and

have become a key to domestic economic growth and prosperity (Drucker

1995 153)

Literature suggests that because globalization tends to redistribute economic

rewards in a non-uniform pattern a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) Strong opposition to

globalization usually originates from developing countries that have been

affected by the destabilizing effects of globalisation However in recent years

there have been heated debates in Western economies triggered by

significant loss of professional jobs as a result of offshoring to low wage

countries (Schaeffer 2003)

Workers in manufacturing and farming in advanced economies are becoming

increasingly wary of globalization as their income continues to decline

18

significantly In parallel to the angry protests against globalization the flow of

goods services and investments across national boarders has continued to

fall after the rapid gains of the 1990s The creation of regional trade blocs

such as NAFTA the European Union and the Association of Southeast Asian

Nations have stimulated discussions about creating other trade zones

involving countries in South Asia Africa and other parts of the world

Although it is often assumed that countries belonging to the World Trade

Organization (WTO) have embraced globalization the fact is that the world is

only partially globalized at best (Schaeffer 2003)

Many parts of Central Asia and Eastern Europe including the former

republics of the Soviet Union parts of Latin America Africa and parts of

South Asia have raised heightened scepticism about globalization (Greider

1997) In fact less than 10 of the world‟s population are fully globalized (ie

being active participants in the consumption of global products and services)

(Schaeffer 2003)

According to Guile`n (2001) these trends might indicate that globalization is

being impeded by tendencies towards country-specific modes of economic

development making the convergence of IB-related values and practices

difficult to achieve Hofstede (1980)‟s favourite definition of f ldquoculturerdquo is

precisely that its essence is ldquocollective mental programmingrdquo it is that part of

peoples conditioning that they share with other members of their nation

region or group but not with members of other nations regions or groups

Hofstede (2001) asserts that these mental programs of people around the

19

world do not change rapidly but remain rather consistent over time His

findings tend to suggest that cultural shifts are relative as opposed to

absolute Although clusters of some countries in given geographical locales

(eg Argentina Brazil Chile) might indicate significant culture shifts towards

embracing Anglo values the changes do not diminish the absolute differences

between such countries and those of the Anglo countries (ie US Canada

UK)

According to Hofstede (1980) Examples of differences in mental

programming between members of different nations can be observed all

around us One source of difference is of course language and all that

comes with it but there is much more In Europe British people will form a

neat queue whenever they have to wait not so the French Dutch people will

as a rule greet strangers when they enter a small closed space like a railway

compartment doctor‟s waiting room or lift not so the Belgians Austrians will

wait at a red pedestrian traffic light even when there is no traffic not so with

the Dutch Swiss tend to become very angry when somebody-say a foreigner

makes a mistake in traffic not so with the Swedes All these are part of an

invisible set of mental programs which belongs to these countries‟ national

cultures Such cultural programs are difficult to change unless detaches the

individual from his or her culture Within a nation or a part of it culture

changes only slowly (Hofstede 1980)

20

This is the more so because what is in the minds of the people has also

become crystallized in the institutions namely government legal systems

educational systems industrial relations systems family structures religious

organizations sports clubs settlement patterns literature architecture and

even in scientific theories All these reflect traditions and common ways of

thinking which are rooted in the common culture but may be different for other

cultures (Hofstede 1980)

22 The dynamics of Culture as a Multi-level Multi- layer construct

Multi-level approaches of viewing culture as a multi-level construct that

consists of various levels nested within each other from the most macro level

of a global culture through national cultures organisational cultures group

cultures and cultural values represented the self aspect of the individual See

figure 3

21

Figure 3 The dynamic of top-down-bottom up process across levels of

culture (Source Schein 1992)

The model proposes that culture as multi-layer construct exist at all levels

from global to the individual Changes that take place at the external layer of

behaviour are most likely shared by individuals who belong to the same

cultural background level hence characterising the aggregated unit (Schein

1992)

Top-

Down

Individual

Behaviour

Values

Assumptions

Global Culture

National Culture

Organizational Culture

Group Culture

Bottom

Up

22

Below the global level are nested organizational layers or networks at the

national level with their local cultures varying from one nation or network to

another Further down are local organizations and although all of them share

some common values of their national culture they vary in their local

organizational cultures which are also shaped by the type of industry that

they represent the type of ownership the values of the founders etc Within

each organization are sub-units and groups that share common national and

organizational cultures but differ from each other in their unit culture based on

differences in functions of their leaders‟ values and the professional and

educational level of their members At the bottom of this structure are

individuals who through the process of socialization acquire the cultural values

transmitted to them from higher levels of culture Individuals who belong to the

same group share the same values that differentiate them from other groups

and create a group-level culture through a bottom-up process of aggregation

of shared values (Schein 1992)

Both top-down and bottom-up processes reflect the dynamic nature of culture

and explain how culture at different levels is being shaped and reshaped by

changes that occur at other levels either above it through top-down

processes or below it through bottom-up processes(Schein 1992) Similarly

changes at each level affect lower levels through a top-down process and

upper levels through a bottom-up process of aggregation The changes in

national cultures observed by Inglehart and Baker (2000) could serve as an

23

example for top-down effects of economic growth enhanced by globalization

on a cultural shift from traditional values to modernization

In view of the complexity of the organizational structures specific

organizational structures that have global character need to be established so

as to adopt common rules and procedures in order to have a common

bdquolanguage‟ for communicating across cultural borders (Kostova 1999 Kostova

and Roth 2003 Gupta and Govindarajan 2000)

Given the dominance of Western Multi National Companies (MNCs) the

values that dominate the global context are often based on a free market

economy democracy acceptance and tolerance of diversity respect of

freedom of choice individual rights and openness to change (Gupta and

Govindarajan 2000) The multi-level structure explains how a lower-level

culture is being transformed by top-down effects and that the cultural layer

that changes first is the most external layer of behaviour In the long run

bottom-up processes of shared behaviours and norms would affect the local

organizational culture as well (Schein 1992)

23 International Business and Culture

Knowledge of cultural differences is one of the key components in

international business practices and success Improving levels of cultural

awareness can help companies build international competencies and enable

individuals to become more globally sensitive (Hofstede 2003) Indeed

cultural differences contribute towards different ways people behave in

24

business Research in the field of international management underscores that

the attributes of cultural knowledge used by a firm play an important role in the

firms expansion For example Martin and Salomon (2003) found that cultural

orientation in entrepreneurial action is a central theme and can serve as a

starting point for immigrant business

ldquoUnderstanding the culture and the conceptualisation of culture in conjunction with entrepreneurial action is a critical issue when doing business in an international environment Contributions of economic geography inspired by the cultural turn which shows alternative ways of thinking about the connection between culture and economy by using a new understanding of culture are also critical (pg 198)rdquo

The statement underscores the important of understanding the culture of a

society before attempting to do business there otherwise the company runs a

risk of going out of business The ways in which different groups of people

interpret their environment and organise their activities is based the on the

specific cultural values and assumptions Certain values often thought to be

universal really do differ from culture to culture What constitutes an ethical

business practice is not the same everywhere This can be an enormously

difficult area in managing business across cultures (Straub et al 2002)

Although one may claim cultural differences to be going away they are

actually being absorbed in the business practices This makes it more critical

than ever to try to understand different cultures and their influence on the

ways people do business and view the world The costs of not understanding

are getting greater than ever The essence of culture is not what is visible on

the surface It is the shared views about what people understand and interpret

25

the world These cultural differences are crucial influences on interactions

between people working and managing across culture (Gertler 1997)

The social behaviour of a society is embedded in a particular context and is

connected to other deeply held values and beliefs (Weisinger and Trauth

2003) This means that the stakes are high for mismanaging cultural

differences Ignoring or mishandling differences can result in an inability to

retain and motivate employees a misreading of the potential of cross-border

alliances marketing and advertising blunders and failure to build sustainable

sources for competitive advantage Mismanaging cultural differences can

render otherwise successful managers and organisations ineffective and

frustrated when working across cultures (Weisinger and Trauth 2003)

24 Putz Model For Immigrant Business and Culture

Literature in the field of Immigrant Business differentiates mainly between two

basic approaches each with a different emphasis which are combined to

explain entrepreneurial action of immigrants (Putz 2000) The first approach

emphasis the bdquoopportunities‟ offered by the host country including access to

the market and job market conditions The second approach focuses on the

bdquoresources‟ of migrant groups from whom the concept of culture becomes

essential (see Figure 1 below)The Putz (2000) cultural model below is a

summary of explanatory approaches following the assumption that self

employment of certain groups is the result of their specific cultural

predisposition which favours business activity

According to Putz‟s (2000) view of cultural model the bdquoopportunities‟

approach which refers to market possibilities as an explanation for self

26

employment of immigrants assume that there are certain market segments

with favourable development perspectives especially for immigrant groups

Here two factors receive special attention which are niche markets and legal

and institutional frameworks Niche markets make the establishing of business

by immigrants easier because their needs for consumer goods create specific

demand Legal and institutional frameworks gain awareness in international

comparative studies through restrictions specified by a country regarding

business permits and regulations these frameworks influence both the extend

and the sectored structure of the bdquoimmigrant business‟ (Putz 2000)

According to Putz (2000) the observation that most immigrant groups show a

higher level of self employment rate than others often forms the background

explanation which focus on opportunities created by the host society

Resource models stress the shared characteristics of migrants of same origin

Resources models explain that certain groups have specific cultural

resources which make it easier for members of that group to become self

employed therefore one can distinguish between the cultural traditions and

socialethnic networks ( Putz 2000)

27

Figure 4 Dominating models concept of bdquoImmigrant Business‟ (Source Putz

2000)

OPPORTUNITIES

Market Access

Possibilities

Market Conditions

Niche Markets

lsquoOpenrsquo Markets

Job Market

Conditions

Access

Vertical Mobility

Legal and Institutional

Frameworks

lsquoEthnicrsquo

Business

RESOURCES

lsquoClass Resourcesrsquo lsquoCultural Resourcesrsquo

Cultural

Traditions

Social lsquoEthnicrsquo

Resources

28

When successfully managed differences in culture can lead to innovative

business practices faster and better learning within the organisation and

sustainable sources of competitive advantage (Sondergaard and Hofstede‟s

1994) In relation to that the current study argues that managers need to

study and understand the culture and the niche market before investing This

assumption has been raised as a result of the previously reported experiences

and research findings already reported so far It is therefore critically important

to understand that every society has got its own way of behaving which needs

to be understood if the business is to succeed Operating companies need to

understand what their business means to the people of the given community

and their culture

Several studies of international business have indicated that

internationalization of the firms is a process in which the firms gradually

increase their international involvement(Johanson amp Wiedersheiml 1995

Gibson 1999 Chui et al 2002 ) It seems reasonable to assume that

within the frame of economic and business factors the characteristics of this

process influence the pattern and pace of internationalization of firms Figure

5 below shows a model of the internationalization process of the firm that

focuses on the development of the individual firm and particularly on its

gradual acquisition integration and use of knowledge about foreign markets

and operations and on its successively increasing commitment to foreign

markets The basic assumptions of the model are that lack of such knowledge

is an important obstacle to the development of international operations and

that the necessary knowledge can be acquired mainly through operations

abroad (Johanson and Wiedersheiml1995)

29

FIGURE 5 The Basic Mechanism of Internalisation- State and Change Aspects

Figure 5 Basic Mechanism of Internalisation (Source Johanson amp

Wiedersheiml 1995)

Market knowledge and market commitment are assumed to affect both

commitment decisions and the way current activities are performed These in

turn change knowledge and commitment ( Aharoni 1966) In the model it is

assumed that the firm strives to increase its long-term profit which is

assumed to be equivalent to growth (Williamson 1966) The firm is also

striving to keep risk-taking at a low level These strivings are assumed to

characterize decision-making on all levels of the firm Given these premises

and the state of the economic and business factors which constitute the frame

in which a decision is taken the model assumes that the state of

internationalization affects perceived opportunities and risks which in turn

influence commitment decisions and current activities (Johanson amp

Wiedersheiml 1995)

Market

Knowledge

Market

Commitment

Commitment

Decisions

Current

Activities

30

2 5 The Role Of Information Communication Technologies

Hofstede (2001) observed that not only will cultural diversity among countries

persist but also new technologies might even intensify the cultural differences

between and within countries Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

Information communication technologies (ICTs) enable users to access varied

amounts of information globally however it does not necessarily increase

their capacity to absorb the information at the same rate as the information is

disseminated or diffused (Bhagat et al 2002) In addition information and

knowledge are interpreted through cultural lenses and the transfer or diffusion

of organizational knowledge is not easy to accomplish across cultural

boundaries (Bhagat et al 2002)

Ethnic groups around the world observe the lifestyles and cultural values of

other countries and some are interested in adopting part of the lifestyle and

values but others reject it completely (Kirkman and Shapiro 2000) The

effects of new technologies on improving efficiencies of multinational and

global corporations are well known but it is not known how these new

technologies especially computer-mediated communication and the Internet

31

might create significant shifts in the cultural patterns of different ethnic groups

(Kirkman and Shapiro 2000) or on their ways of doing business

In essence there in need to explore how the spread of ICTs is affecting the

progress of globalization in different parts of the world by incorporating the

role of cultural syndromes organizational cultures and other processes

which has recently been attempted by scholars such as Bhagat et al (2003)

and Gibson and Cohen (2003)

Information and Communications Technology (ICT) has become a catchword

with different interpretations and viewpoints even among experts As the

name suggests ICT encompasses all the technology that facilitates the

processing transfer and exchange of information and communication

services In principle ICTs have always been available since the advent of the

printing press The only difference is that from the late twentieth century rapid

advances in technology changed the traditional ways in which information was

processed communications conducted and services available (Adu 2002)

These technological advances have changed business operations and the

way people communicate They have introduced new efficiencies in old

services as well as numerous new ones One could even imagine going as far

as replacing the term Post-industrial Society with ldquoInformation Society that

is a society where the ability to access search use create and exchange

information is the key for individual and collective well-being (Kaplan 2001)

32

Globally entrepreneurship is considered as the engine of economic

development The SME sector has the potential to address socio-economic

challenges facing both developing and developed countries Without small

business development it is argued that economies stagnate unemployment

levels continue to rise and the general standard of living deteriorates

Information and communications technology (ICT) has been identified as a

major area of need to develop the SME sector in areas of information

provision access to national and international markets and other areas of

business development and support ( Ferrand and Havers 1999)

ICTs enable entrepreneurs to manage their businesses efficiently and thus

enhancing their competitiveness in the global market They can increase their

geographic reach improve efficiency in procurement and production and

improve customer communications and management For these reasons the

need to encourage and accelerate the uptake and optimal application of ICTs

by SMEs in different sectors of the economy cannot be overemphasized

(Ramsay et al 2003) The ICT sector has the potential to absorb prospective

entrepreneurs considering various business opportunities offered by the

sector Some of the business opportunities available within the sector relate to

systems integration application development database administration web

design and internet service provision The sector is also seen as an area with

major opportunities for the historically disadvantaged sectors of the

population It therefore becomes imperative for government to provide

mechanisms to accelerate the entry of SMMEs into the ICT sector (ILO 2001)

33

26 Cross Culture and International Business

Cross-cultural management advice rests on several assumptions in the

tradition of Hofstede (1997) that a) that national culture is comprised of norms

and values that can be readily identified and addressed b) that these norms

values and patterns of behaviour are stable and change at an extremely slow

pace and c) that national culture predominates over organizational culture

epistemic culture gender or other determinants of attitudes and behaviour

According to Hosftede (1997) national culture is comprised of norms and

values that can be readily identified and addressed

Organisational culture (common values and attitudes) affects organizational

success and innovation develops over time and may be difficult to change

ldquoThere is a relationship between an organization‟s culture and its

performance The pervasive nature of organizational culture means that if

change is to be brought about successfully this is likely to involve changes to

culturerdquo (Mullins 1999)

An alternative view sees culture as more complex context-specific and

dynamic For example Weisinger and Trauth (2003) examined the interaction

of national cultures the IT industry culture and a particular firm‟s

organizational culture They observed that the resulting situated culture ldquois

fluid contextually dependent and created by actors within a group who may

hold conflicting assumptions and world viewsrdquo In other words culture is as

what it is because of what it does This means that management must ensure

34

that key capabilities for example marketing analytics or process controls are

developed and nurtured across the organization

Successful global managers recognize that they cannot respond to every

unique opportunity that local settings offer Thus there is an inherent tension

in cultural sensitivity a management team which is ldquotoo sensitiverdquo to cultural

and structural features exposes the organization to the risks that come with a

lack of focus and coherence while managers who do not take cultural and

structural features into account expose the organization to the risks that come

with organizational rigidity (Myres and Tan 2002)

According to Mistry (1999) entrepreneurial networks and clusters in sub-

Saharan Africa have not generally produced the kind of strong transnational

links that characterize Asia‟s flourishing pattern of industrial diffusion The

author states that the reasons for this are complex differences in geography

different models provided by leading countries in the neighbourhood and

policies adopted by governments in the respective regions Chinese business

networks are responsible for some of the information ideas and capital that

helped launch the small Indian Ocean nation of Mauritius as an important

centre for export-oriented industry The Chinese networks in Mauritius also

continue to facilitate a role that Mauritius first began to play in the eighteenth

century they serve as a gateway for overseas Chinese entrepreneurs

interested in investing both in Mauritius and elsewhere in Africa (Mistry 1999)

35

27 Investing in Mauritius

There are a lot of advantages in investing in Mauritius The economy of the

country is stable and the graph of the economy and business is one the rise

for a considerable period of time The Mauritius government has undertaken a

sequence of strategic measures to support its course into offshore banking

manufacturing and financial services communication technology and tourism

keeping in mind the significance of foreign investment as a basis of

nourishment of the financial development (Dabee and Greenaway 2001)

According to Dabee and Greenaway (2001) tthere are various factors that

influence financiers to invest in Mauritius like accessibility of skilled labor

political constancy and venture-friendly institutions and regulations One of

the major factors for the development of Mauritius is the Foreign Direct

Investment (FDI) The government of Mauritius has given all the necessary

support to create the most favorable investment setting by the following steps

Building modern infrastructure

Endorsing suitable legislations

Commencing packages of investment inducements

Investing in human capital

Some of the advantages of investing in Mauritius are as follows

High-quality infrastructure with superb transportation

Democracy and a steady government

Free market financial system fastened on export slanting activities

Excellent system of sea and air transport

36

High standard of living good international schools

A highly educated bilingual and responsive work force

Knowledgeable financial segment providing outstanding services

Constructive market contact and good inducements ( IBP 2002)

Mauritius has various sectors where investment can be made like Information

and Communication Technology and manufacturing For doing business in

Mauritius registered trademark is required The trade marks for business are

issued by the registered Patents and Trademarks sector of Ministry of Foreign

Affairs International Trade and Cooperation In the country of Mauritius a

foreigner is eligible to hold 100 shares In this case one of the directors of

the company has to inhabit in Mauritius and the foreign individual has to

obtain a sanction from the Office of Prime Minister (IBP 2002)

In Mauritius the laws concerning income tax is based on the English law of

income tax The companies in Mauritius are lawfully accountable to pay out

income tax on their profits at an even rate of 25 A company which is

included in the country or has its scheming benefit in the country is measured

for tax reasons to be an occupant corporation To the Mauritius companies

various types of tax incentives are granted The companies that hold

certificate for Tax inducement are responsible to tax at an abridged rate of

15 while the scheduled companies are accountable to pay tax at the rate of

25 ( Dabee and Grrenaway 2001)

37

CHAPTER THREE

METHODOLOGY

Having looked at culture to some depth this chapter explains the methods

used in carrying out the study The study used mixed method approach to

allow for data corroboration and dynamism since the subject in question

needed dynamism and sensitivity in approach

This research mixed both qualitative and quantitative approaches to try and

get best possible research by combining both features because they

complement each other Quantitative data techniques condense data in order

to get a bigger picture whereas qualitative techniques are data enhancers

making it possible to see issues more clearly (Dawson 2002 Neuman 2000)

Attempt was made to keep in line with recommendation made in the Leeds

Declaration proposition number 6 which calls for the application of multiple

methods and perspectives to try and understand social and cultural issues

(Hunter and Lang 1993) Mixing qualitative and quantitative methods also

called positivist and interpretive respectively (Gilbert 2001 and Bowling 2002)

is effective in a complex issue study such as this one because they highlight

different perspectives of the same problem in this case - the public in parallel

with the individual level(Gilbert 2001) This is because quantitative methods

adopt a numerical approach to data collection and analysis to provide macro

level perspective whereas qualitative methods provide micro level perspective

through collecting data from individuals (Ibid)

38

There was also use of impersonal (public) documentation using official

records which were more library based research (Grbich 1999) on top of

theory generating field based methods (Ibid) Many researchers (Bowling

2002 Neuman 2000 Grbich 1999 Denscombe 2003 and Gilbert 2001)

concur that neither of the methods is superior to the other but just different

each having its strengths and weaknesses (Dawson 2002)

The study sought to explore the attitudes behaviour subjective meanings and

experiences of the participants making qualitative approaches best suited

because they emphasize the importance of context (Neuman 2000) However

to generate objective and factual (Maynard and Purvis 1994) statistical

figures quantitative research was more suitable Hence mixing of methods

(Dawson 2002 Denscombe 2003) to counteract weaknesses in both

approaches to give breadth and width to the study (Maynard and Purvis

1994) The flexibility of qualitative research allowed for re-focusing and

refinement of the tool dependent on participants‟ reactions throughout

(Neuman 2000) to pick up any emerging evidence thus applying the

grounded theory approach (Dawson 2002)

39

31 Research Setting

Mauritius is a volcanic island of lagoons and palm-fringed beaches in the

Indian Ocean Southern Africa east of Madagascar with a population of

about 12 million has a reputation for stability and racial harmony among its

mixed population of Asians Europeans and Africans The island has

maintained one of the developing worlds most successful democracies and

has enjoyed years of constitutional order since independence in1968 Over

the past three and half decades the country has been transformed from one

of the poorest in the world to a middle income country with per capita Gross

Domestic Product US $7000 (World Bank 2006) It has preserved its image

as one of Africas few social and economic success countries that mainly

depends on sugar and clothing export and a centre for upmarket tourism But

Mauritian exports have been hit by strong competition from low-cost textile

producers and the loss of sugar subsidies from Europe Consequently

attention has turned to diversification in line with global trends

To this end SMEs have been identified as important instruments to achieve

economic diversification Today the government vigorously supports SMEs

through a range of strategies eg the creation of a business friendly climate

via import liberalisation tax reforms and the launch of the SME Partnership

fund which gives subsidized loans to aspirant SME owners and makes the

availability of finance and facilitating access in particular for those enterprises

that have viable projects but are short of equity The Small Enterprises amp

Handicraft Development Authority (SEHDA) was created following the merger

of the Small amp Medium industries Development Organisation (SMIDO) and the

National Handicraft Promotion Agency (NHPA) The aim of the merger is to

40

rationalize and optimize the use of resources dedicated to the small business

sector in Mauritius

Various cultures and traditions flourish in peace though Mauritian Creoles

descendants of African slaves who make up a third of the population live in

poverty and complain of discrimination Mauritius was uninhabited when the

Dutch took possession in 1598 Abandoned in 1710 it was taken over by the

French in 1715 and seized by the British in 1810 The culture of the country

reflects its diverse ethnic composition There are many religious festivals

some important ones being (in random order) Divali (the hindu festival of

lights in October) Christmas Cavadee (a penitence festival of the south

Indian tradition of hinduism in January) Eid ul Fitr (celebrating the end of the

period of fasting in Islam As the Islamic calendar does not correspond to the

Gregorian calendar the date of its celebration in the year tends to vary In

2003 it was celebrated in November) With such a strong history diverse

culture and such a promising economy painted above makes Mauritius a rich

setting to investigate culture and small medium business entrepreneurship

32 Methods

As justified already this study applied method mix to exploit the benefits of all

methods used while minimising the effects of their weaknesses The obvious

benefit of method mix is that it involves more data which is likely to improve

the quality of research (Denscombe 2003) and that is what the researcher

sought to achieve In deciding which method to use it was acknowledged that

the chosen methods were not superior in any way but more suited to the study

41

circumstances based on the premise of ldquohorses for courses (Denscombe

2003 page 83)

A Questionnaire used in the online web survey allowed for collection of

data from large numbers of participants economically since the project had

financial and time limitations (Ibid) The other advantage of survey exploited is

generation of quantitative data However weaknesses of the method

(empiricism lack of depth and accuracy of responses) were a challenge The

questionnaire was open ended and was completed by the participant in the

absence of the researcher Any questions arising from the participant not

understanding or misinterpreting the question where not taken care of Focus

groups were used to gain depth into some of the emerging issues from

questionnaires to gain insights into the issues surrounding widow inheritance

and to validate some of the data (Denscombe 2003) Telephone and face to

face interviews were used to gather to gain in-depth information on the

issues

All accessible literature on culture and investment in Mauritius as well as

other parts of Africa was reviewed to get insight into any related work to

identify key issues and current knowledge gap so as to sign post this study for

any audience (Ibid)

42

33 Research Participants and sampling

It was difficult to get exact demographic data for each sector Consequently it

was not possible to use any scientific sampling techniques The study

therefore used non-probability sampling (Neuman 2002 Bowling 2002

Denscombe 2003) targeting urban based population

The sample baseline characteristics were

SME managers from aged 18 years and above and over 65 was the

limit Any religion faith Any socio-economic background and residents

of Port Luis and surrounding areas

To sample for quantitative data purposive and snowballing sampling

techniques were used because it was not possible to apply any statistical

formula in getting the samples since there was no single list of SME managers

and other stakeholders to use with any form of probability sampling

Participants were snowballed from one sector to another until the whole

sectors were covered For the focus groups homogenous and critical case

(Grbich 1999) sampling was used to get particular sub group to provide

details In this case to get government officials and the private sector who

were strong enough to talk about their experiences

A total of 161 participants were reached from all the sectors These included

SME manager government officials and the private sector The researcher

wishes to point out that these numbers were not conclusive The numbers

could be much higher because in case the researcher phoned the participants

they were not available to take the call there was no time to go back to

43

ascertain the details Those who were not willing to take part in the study were

also excluded from the above figures For the focus groups discussions 5

government officials and the private widows were invited and used Skype

technology to do a conference

The times when the participants were contacted met were entirely dependent

on participant availability and other events at the time (Gilbert 2001) It varied

between 800 am and 700 pm in the evening because of the time differences

UK and Mauritius time Care was taken to avoid compromising times such as

late in the evening or culturally sensitive days such as weekends when people

were engaged in funerals and church services in this case

The participants showed weariness towards the study because as they put it

ldquoa lot of people come along claiming to collect data to help but never show up

againrdquo

34 Data collection Instruments

The researcher developed an online quantitative data collection questionnaire

(web survey form) which was posted on the university web server with help of

the department technicians A multiple recipient list was created from the

details in the SEHDA website and was randomly sent to the recipients These

only included the SME managers from the seven sectors About 20 contacts

were selected from each sector which made a total of 140 participants

Telephone interviews were made to about 17 government officials and the

private sector who were later divide n to focus groups and a teleconferencing

44

was organised on Skype Face to face interviews were done with government

officials from the Mauritian High Commission in the UK

Apart from the questionnaire an Olympus VN 2100 PC Digital Voice Recorder

was also used during the focus group discussion with the permission of

participants also on telephone interviews and face to face interviews This

was tested set and correctly positioned by the telephone speaker before the

session began to ensure proper functioning It was fitted with a mini

microphone to improve recording quality The digital voice recorder small in

size (only 68 grams in weight) proved user friendly because it was not

intruding too much into the face of participants as opposed to older recording

devices There was a pair of AAA batteries on standby in case the batteries in

use ran flat during the session

35 Ethical Considerations

This study involved very little of sensitive issues but it strived very much to

adhere to the fundamental principles of Human Research Ethics of Respect

for Persons Beneficence and Justice The researcher ensured autonomy self

determination and protection of vulnerable persons through informed consent

participation confidentiality and thorough explanation of what the research

was all about to those with limited knowledge and education Any risk that

might have resulted from the study was minimised as much as practically

possible and the researcher took full responsibility for the protection of

participants There was no form of discrimination other than on participant

baseline characteristics

45

The study also upheld the six key ethical research principles as stipulated by

ESRC - UK (ESRC 2005) To ensure anonymity pseudonyms were used for

participants The information gathered was safely protected through password

use on the computer system and only the researcher had access to the

information The researcher was responsible for storage and destruction of

any information no longer needed such as audio files after transcription

Research respondents participated in a voluntary way free from any coercion

and free to withdraw at any point should they felt uncomfortable

The first ethical committee whose approval was sought was the University of

Sheffield Ethical committee after which the researcher sought ethical approval

from Mauritian authorities through the relevant ministries It was not straight

forward getting ethical approvals in Mauritian but ultimately the ministry of

SMEs approval was obtained

36 Procedure

After all the necessary approvals were obtained the researcher wrote an

explanatory letter (Grbich 1999) or bdquoparticipant‟s information sheet‟ (appendix

5) which included information on informed consent (Denscombe 2003)

After piloting the tools the researcher started by making calls to make

appointment for interviews As the quantitative data collection went on

recruitment of participants to take part in qualitative aspect was done

simultaneously due to time constraints The researcher used individual

judgement to asses those participants who would be courageous enough to

respond to the questionnaire online and to the interviews The managing

46

director for RCBusiness Support Ltd also provided a number of potential

respondents who were used at the initial stages of the study Each interview

session lasted averagely 50 minutes The researcher went to organise the

teleconferencing for the focus group on Skype which also lasted for average

50 minutes

37 Data Analysis

Since the distinction between quantitative and qualitative research is not

watertight (Denscombe 2003) data analysis embraced both because they

have similarities and differences (Neuman 2000) There was analysis of

words and numbers thus holistic versus specific focus (Denscombe 2003)

The analysis adopted a five stages approach (Denscombe 2007) The first

stage was data preparation followed by data exploration analysis

presentation and finally validation

Though some researchers champion for advanced inferential statistics

(Denscombe 2007) the researcher opted for descriptive statistics for the

quantitative data analysis because they still remain effective ways of data

analysis and presentation (ibid) The research data involved nominal as well

as discrete and continuous data which could effectively be analysed using the

chosen method The data was grouped frequencies were described and

finally any linkages were identified The end product of the analysis process

is presented in the results section in various formats Basic statistical

techniques were used to give the data additional credibility in terms of

interpretations of the findings (Denscombe 2007)

47

For the qualitative data the first thing was to back up the original voice

recorded focus group discussion into a password protected lap top This

ensured not only the security of the data but also a back up in case of data

loss The researcher then listened to the recording several times to familiarise

himself with the data after which transcription took place After that the data

was interpreted and categories themes were identified since thematic

analysis was employed The Putz (2000) model was used as a guide to

finding themes The findings are presented in the results section

38 Planned programme of dissemination

The study findings were disseminated to all relevant stakeholders in print

format including the university as part of the postgraduate degree requirement

in academically fulfilling format Two copies of the report were sent to the

Ministry of SMEs in Mauritius and two copies to the Board of Investment of

Mauritius in the UK as part of the requirements of ethical approval and

research permission granted by the ministry

Finally it was hoped that the report would meet publication requirements so

that it could get a wider audience through a reputable journal

48

39 Time scale

The study was anticipated to take the following breakdown from the time all

ethical approvals and consent were obtained

Table 1 Table showing the study time scale

Stage Time allocation Action item Accountable person

I Weeks 1 - 3 Research set up Sampling and

access to participant negotiations

Angelinah Boniface

II Weeks 4 - 12 Data collection and Analysis Angelinah Boniface

III Weeks 12 - 16 Analysis Report writing and

dissemination

Angelinah Boniface

310 Limitations and Delimitations

This study was not fully funded as such high telephone costs travelling

affected the exercise Only business people in Mauritius both men and women

were interviewed The study covered both local and foreign investors

Participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

49

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

A major limitation is a low response rate of the questionnaire and therefore a

representative sample of the SME population was not achieved Thus any

conclusions made from the analysis of the collected data cannot be

generalized to the broader SME population Bias may have been inadvertently

introduced during interviewing caused from such things as leading questions

50

CHAPTER 4

RESEARCH FINDINGS AND DISCUSSION This chapter aims to discus the research findings from the study The chapter

is divided into two sections the first part presents and discusses the

quantitative data and the second part discusses qualitative It is therefore

worth mentioning that the Putz (2000) model was used to guide the

qualitative data analysis and some of the themes were taken from the model

and some were generated from the research findings It must be noted that

any findings uncovered from this study cannot be generalized to the broad

public domain regarding SMEs

Section A of the questionnaire and the interview guide included questions that

collected background information on the SME managers and the responding

firms These data constitute the substantive material for analysis in the

ensuing sections The tables below depict the socio demographic

characteristics of the survey participants age group gender educational level

and experience as ownermanager In the following sections there aspects

are discussed

51

41 RESPONDENTS RATE ACCORDING TO SECTORS

TABLE 2

SECTOR SEHDAS SURVEY SENT

SURVEY RECEIVED

RESPONSE RATE

Leather and Garments

1678 20 12 60

Wood and Furniture

2196 20 11 55

Paper Products and Printing

1541 20 9 45

Chemical Rubber and Plastic

1376 20 11 55

Pottery and Ceramic

793 20

17 85

Jewellery and Related Items

1674 20 13 65

Fabricated Metal Products

1267 20 14 70

TOTAL 7 140 101 72

Table 2 shows the response rates from various sectors of SME in Mauritius

which were targeted by the online survey As the table indicates pottery and

ceramic sub sector had the highest response rate (85) with paper products

sector giving the least response rate (45) Overall 72 response rate from

all the targeted sectors was satisfactory It is worth mentioning that the total

number of participants adds to 140 since this question was only directed to

sectors not to other stakeholder in the research sample

52

42 DEMOGRAPHIC PROFILE PARTICIPANTS

TABLE 3 AGE GROUP AS PER PARTICPANT

AGE GROUP FREQUENCY PERCENTAGE

-25 7 43

26-35 34 211

36-45 53 329

46-55 35 217

56-65 22 137

gt 65 11 63

TOTAL 161 100

Evidence from most of entrepreneurial literature suggests that self-

employment becomes an increasingly attractive option as one nears middle

ages As can be seen in table 3 respondent‟s ages ranged from 25 to 65 and

the largest proportion (329) of the participants was in the age range of 36ndash

45 Additionally participants were biased towards the age ranges of between

36 and 65 and away from the under 25 and over 65

TABLE 4 GENDER PROFILE AS PER PARTICIPANT

GENDER

Male 116 720

Female 45 280

TOTAL 161 100

53

In relation to gender the research sample was predominantly male (72) a

striking although unsurprising demographic characteristic that reflects the

composition of the larger business sector in the country as a whole

Consequently only (28) were females This is clearly illustrated in table 4

above

TABLE 5 EDUCATION PROFILE AS PER PARTICIPANT

EDUCATIONAL LEVEL

Primary 8 50

Junior-level 29 180

O-level 78 484

Diploma 34 211

Higher Degrees 12 75

TOTAL 161 100

As evident from table 5 the educational levels attained by respondents varied

considerably as follows Primary School Certificate (8 or 5) Junior

Certificate (29 or 180) Ordinary Level (78 or 484) Diploma (34 or

211) and higher Degrees (12 or 75 ) On the whole though the data

suggest that the educational levels of our respondents are low the largest

proportion (398) possessing an Ordinary Level certificate

54

TABLE 6 YEARS EMPLOYED AS CEO AS PER PARTICIPANT

Years Of Employed as CEO

0-3 44 273

4-7 88 546

8-14 15 94

15-19 11 68

Over 20years 3 19

TOTAL 161 100

Not surprisingly table 6 shows that most of the responding executives did not

have education that emphasized a business curriculum This can be

understood with respect to the Mauritian educational curriculum which largely

overlooked business subjects until very recently

The research sample participants had been employed at their current firms on

average 1467 years and had an average of 12 years experience in the

manufacturing industry Four predominant job titles used by the senior

executives emerged from the questionnaireinterview responses Managing

Director (38) Director (26) Manager (20) and Chief Executive Officer

(16)

55

43 CHARACTERISTICS OF RESPONDING FIRMS

This section presents the descriptive statistics of the responding firms The

description focuses on age of the firm employment size firm revenues and

firm ownership

TABLE 7 COMPANY AGE PROFILE

Age of Company Frequency Percentage

1- 3 years 44 314

4- 6 years 68 486

7-10 years 19 136

11-15 years 7 50

Above 15 years 2 14

TOTAL 140 100

Table 7 displays the statistical data Of the firms responding the largest

proportion (486) was 4 to 6 years old Overall the sample reveals a skewed

distribution towards the ranges between 4 and 15 Also it is interesting to note

that 915 of the responding firms are mature that is beyond the start-up

phase

TABLE 8 EMPLOYEE PROFILE AS PER PARTICIPANT

Number of Employees

50-99 101 721

100-200 39 279

TOTAL 140 100

56

Unsurprisingly the vast majority of the responding businesses had fewer than

100 employees as depicted n table 8 with the largest proportion (701) in

the 50ndash99 employee categories The study found out that most small

companies would opt to have family and relatives as employees to minimise

costs Only 32 average of the firms were medium-size The preponderance

of small firms in the sample mirrors a more general pattern of firm distribution

in the country where medium and large firms are a conspicuous small

minority

TABLE 9 ANNUAL SALES AS PER COMPANY

Annual Sales

Less than R100 000 88 629

R101 000- R250 000 36 257

R251 000- R15 million 11 79

Above 15 million 5 35

Total 140 1000

As shown in table 9 the largest proportion of responding firms 88or 629

achieved a turnover below R10000000Only scant 11 or 79 posted annual

revenue in excess of R15 million

57

TABLE 10 OWNERSHIP AS PER PARTICIPANT

Ownership

Wholly Citizen 76 550

Joint Venture 42 293

Foreign Owned 22 157

TOTAL 140 100

Regarding ownership table 10 shows that an overwhelming majority or 550

of firms were wholly citizen-owned while the remaining 293and 157

were joint venture with citizen stake and foreign-owned respectively

44 Language

From most of the participants investors do not have to learn Local Mauritius

language since English and French are the official languages in the country

Since most of the investors to Mauritius are either English or French speaking

language as such is not a barrier to business practices and success for

prospective investors

ldquohellipwell it is not very important for foreign investors to learn languages

spoken in Mauritius because we can speak both English and Frenchrdquo

[Participant A5]

ldquohellipactually language is not barrier to English or French speaking investorsrdquo

[Participant A21]

58

Language is perhaps the most complex and perplexing aspect of the

Mauritian social mosaic (Rassool 1996) Contrary to the results that show that

language is not a problem for investors since most of the investors who come

to Mauritius are English or French speakers who normally fits well in the

society since these are the two official languages

This intricacy derives from the number of languages spoken combined with

the uses to which they are put and the socio-political connotations they bear

Baker and Stein (1977) scholars studying language use in Mauritius have

found that English is associated with knowledge French with culture

Creole with egalitarianism and other languages ancestral heritage

Consequently although Creole is the most widely spoken language in the

country French predominates in the media and English is the official

language of government and school instruction (Stein and Baker 1977)

According to the 1983 census the top five languages were Creole 541

Bhojpuri 204 Hindi 115 percen French 37 and Tamil 37 These

figures indicate the principal language used in the home Most Mauritians

however speak several languages

Literature suggests that global organizational structures need to adopt

common rules and procedures in order to have a common bdquolanguage‟ for

communicating across cultural borders (Kostova 1999 Kostova and Roth

2003 Gupta and Govindarajan 2000) This is directly reflected by the results

above that foreign investors need not to learn the local language of locals but

its important to create a common language within the organisation that is

59

understood by all stakeholders in the organisation for effective and efficient

communication

45 Religion

The study found that main religions in Mauritius are Hindu Muslim and

Christianity to a lesser extent Hindus make up approximately half of

religiously affiliated Mauritians Of the remaining Mauritians approximately a

third are Christians and about 15 Muslim followed by small Buddhist and

Sikh communities It is therefore imperative that a foreign investor considers

religion of the people of Mauritius before setting up a business Religion

The study also found out that various religions found on Mauritius tend to play

a major part in the islands cultural events and churches temples and

mosques are to be found everywhere Hindu and Tamil celebrations are part

of Mauritian cultural life

ldquohellipFestivals such as Divali (the festival of lights) Holi (in which participants

are covered in colourful powders) and Thai Poosam in which Tamil devotees

pierce their bodies with masses of needles as an act of penance are

popularly attended by Mauritianshelliprdquo [Participant A60]

ldquohelliphellipthere are also a number of diverse practices and superstitions

originating in beliefs brought from Africa and Asia Local sorcerers known as

longanistes or traiteurs are sometimes called in to settle arguments exact

revenge or administer love potionshelliphelliprdquo [Participant B41]

60

However all communities live together in harmony with each other regardless

of religion the study learnt

hellipHarmonious separatism is how we characterise our communal relations

in Mauritiushellip [Participant A13]

Since all citizens are ldquodescendants of slavery there are no tribes unlike

other African countries This has made integration and assimilation easier and

it makes it very easy for any SME to adapt to the local conditions due to pre

existing harmonyrdquohellip [Participant A13]

It is worth noting that businesses remain closed in public religious days but

the purchasing power remains the same regardless of whether it‟s a public

holiday or not

ldquohellipthe demand is not dependent on whether itrsquos a holiday or nothelliprdquo

[Participant A11]

ldquohellipit doesnrsquot matter really whether its holiday or religious holidayhelliprdquo

[Participant A21]

According to Stein and Baker (1977) the Mauritian society is noteworthy for

its high degree of religious tolerance Mauritians often share in the

observances of religious groups other than their own In part as a result of the

multiplicity of religions Mauritius has more than twenty national holidays In

addition the government grants subsidies to all major religious groups

61

according to their membership (Stein and Baker 1977)This is also evident

from the results of the research

Ethnicity religion and language have been important factors in shaping the

way Mauritians relate to each other in the political and social spheres Despite

the fact that sectarian factors are less of a determining factor in peoples

social and political behaviour they remain an important clue to the peoples

past and self-identity (Rassool 2001) As a foreign investor understanding

the religious belies of a society and taking all the necessary details in to

consideration play a major role in an international business environment

setting (Hosftede 1980) For example observing religious holiday and making

sure employees get days off and annual leaves on such important days

having prayer rooms for those willing to pray at work and creating a non-

discriminatory environment for all employees

It is worth mentioning that while religion does not have a direct impact on

Mauritius investment since it an international business hub However it is

important for investors to take note of all the aspects of religion since it plays a

very important role in lives of the Mauritians For example there are religious

holidays as an employer it is important to follow the religious holiday calendar

and give annual leaves to employees on such important days

46 Social Life

For the interest of prospective investors the study found that the social life in

Mauritius is very much close to families and friends People all meet at open

markets for normal shopping and socialise over weekends ldquoeven ministers

62

managing directors of big companies go to open marketsrdquo [Participant

A12]

There is no busy night life in the country as well as cinema and theatres

because most people prefer home video entertainment ldquoMost people found at

social places like cinemas pubs clubs etc are employees and not

employersrdquohelliphellip [Participant A12] Prospective investors should therefore

know that they are likely to meet business associates at board rooms or at

their offices rather than at social centres

In a society where tolerance is a national virtue and ethnic conflicts are

invisible to the casual visitor it takes time to learn the dos and donts of

socialising ldquohelliphere in Mauritius you must realize that we walk on eggs

continuouslyhelliprdquo [Participant B36] For a peaceful and tolerant as Mauritius

undoubtedly is the diverse groups populating the island do not collectively

make up a nation Mauritius like any other island is a nation of nations and

compromise is the order of the day be it in politics in the economy in the

media or at a dinner party the study found

The study found out that unlike other African societies Mauritius people would

prefer to stay at home and watch movies play video games with kids or visit

friends and relatives to socialise or for a night out There are not many social

night clubs in Mauritius as compared to the United Kingdom ldquohellipmany homes

today have a Digital Video Decoders (DVD) sets and donrsquot see the importance

of going out to cinemas and would helliphelliphelliprdquo [Participant A12]

63

This does not come as a surprise since literature suggests that Mauritius

though it is multicultural society and an international hub for business there

are a quiet peaceful and tolerant nation and would prefer to keep their space

(Stein and Baker 1977)

47 Market Accessibility

The study found that as first foreign investor Mauritius government has open

market programme When the free operational zone initiative began investors

imported raw materials imported duty free and foreign companies had to

show transformation of raw materials into fished exports since the

government‟s aim was to increase exports thus improve balance of trade

However in the early stages the initiative did not work as expected because

of certain barriers

Lack of adequate government incentives to lure more investors

Too much repetition meaning most of the companies where doing the

same thing

Lack of skilled human resources

The scenario is summarised by participant B3 in the following

statementldquohelliphellipour people did not have culture of businessrdquo

For more access to the markets further initiatives were put into place The

government assured investors of freedom of capital movement that is the

investors were guaranteed that they would bring their money into and out of

the country whenever they felt like doing so In addition the government

64

embarked on providing more facilities (industrial buildings) and infrastructures

all over the country opening up rural areas because towns already had

infrastructures Lastly first time investors were provided with free access to

customs thus maintaining the earlier option of tax free imports

While Mauritius was doing all these events elsewhere in the world played to

their favour European Union and USA were imposing import quotas on

Chinese and Indian imports to prevent damping So these investors had to

look for alternative markets and Mauritius turned out to be one of such

markets But the government had to act quickly to avoid bdquotransit investors‟

ldquohellipthey are investors who want to do business when it favours them but when

they begin to loose certain privileges or profits get diminished then they take

offrdquohelliphellip [Participant B3]

To avoid this foreign investors were made to transfer skills and knowledge to

local community which led to emergence of Mauritius community of

manufacturing

ldquowho started from easy stitching like socks pyjamas bras etc and later

upgraded to big Mauritius labelshelliprdquo [Participant B3]

The study further found that the initiative did not stop there The government

further established Mauritius Enterprise Development Investment Authority

(MEDIA) in 1985 which took lead in looking for prospective investors from

65

Europe USA Hong Kong and India among others Any willing investor was

transported to Mauritius and accommodated freely on government accounts to

tour the country and carry out investment feasibility studies This helped to

popularise the investment opportunities in Mauritius and attracted many more

investors Currently MEDIA has been transformed into Mauritius Board of

Investment which is no longer in charge of managing industries but

ldquopromotes Mauritius businesses abroad and participates in trade fairs to

further open uprdquo [participant B3]

The study also found out that there are specific niche markets for foreign

investment in Mauritius namely the Offshore Industry the Financial Industry

the Construction and Tourism especially in the area of high class luxury

property market in form of villas hotels and apartments and of recent the

Information Technology (IT) industry These industries cover a large spectrum

including SMEs

ldquohellipone of these sectors makes a very good investment for any investor

especially the construction industryhelliprdquo [Participant A89]

The results agree with Putz (2000) which notes that niche markets make

establishing a business by immigrants easier because the immigrants needs

for consumer goods create a specific demand This is evidence by all the

incentive the Mauritian government have put in order to attract foreign

investors in to country for the benefit of the Mauritian population Furthermore

Putz (2000) emphasise the opportunities offered by the host country including

66

access to the market and job market conditions as important factors for

international business

48 The role of ICT to SME business in Mauritius

The study found that Mauritius has a very well established ICT sector It has

formed the backbone of SME success in Mauritius As early as 1990 the

country provided hellip ldquothe fastest broadband in the world to help SME business

investors who were each allocated free 2MB internet accessrdquohellip[Participant

A 23] Recently the government has in turn invested a lot of money in

developing a cyber city a few kilometres away from the capital Port Louis

which will form the hub for future investments

This high level of ICT development in the country has created SME in areas

such as offshore financial services calls centres and enhanced tourism

industry growth Any prospective investors are guaranteed of highly

developed ICT backed up by highly qualified local human resources The

offshore investment sector has even been further boosted byhellipldquobilateral

agreements with India allowing companies registered in Mauritius to transfer

funds to India tax freerdquohellip[participant B13]

It is hoped that in helliprdquo5 years time the whole island will have free wifi

connectivityrdquo participant B33 The country not only makes use of its advanced

ICT sector but has become a big player in the region as well For example

Mauritius state informatics computerised South African government in 1996 It

has also won other computerisation contracts in Zambia Zimbabwe Namibia

Kenya and Ghana To sustain such success ldquopartnerships have been formed

67

with global players such as Microsoft to provide training not just to Mauritius

nationals but other scholars from the South Eastern Africa region as

wellrdquohellip[participant B13]As matter of fact the government of Mauritius has

invested billions in building s cyber-city a few miles aware from the capital

Port Louis

ldquoits opening in July this year and it is expected to be the centre of attraction

for investorsrdquo [Participant B13]

ldquoactually the government invested in this cyber-city with the intention to

attract European and American investorsrdquo [Participant A6]

From these results there is evidence that technology plays a major role in

SME development Technology particularly computer-mediated

communication has been hailed as a major force in creating cultural

convergence around the world and facilitating the spread of IB Autonomous

business units of global corporations are continuously connected not

necessarily in large physical structures but in global electronic networks

functioning interdependently Some authors even state that physical distance

is no longer a major factor in the spread of global business (Cairncross 2001

Govindarajan and Gupta 2001)

68

48 Governance and the role of women in SME sector

in Mauritius

Mauritius is a multicultural country with ldquo70 of the population of Chinese

Indian ancestry 2 white French origin and the remaining mixed race ndash

creolesrdquo [participant A17] Europe has not have a lot if cultural influence on the

country and predominant cultures are Asian African cultures Study found

that common folklore popular songs in Mauritius would also be ordinary

found on other African countries such as Senegal Mozambique Cameroon

and Sierra Leone among others signifying deep rooted African traditions

The government maintains ndash discrimination laws for either gender In the early

stages of SME development women provided the bulk of the labour in the

rural areas as industries moved away from cities into the rural areas There

are concerted efforts to get women into jobs especially leadership roles

ldquowomen themselves are too slow to act and take advantage of the

government incentivesrdquo

The study found out that woman in Mauritius do not occupy positions of

strategic power decision making This is not a surprise because it is the same

with most Southern African countries The government of Mauritius has put a

lot of structures to support women in business but women are taking it slow to

utilize these structures

69

There are many government agencies and organizations headed by women

and even cabinet posts but most women would rather stay out of politics

becausehelliphellipldquopolitics can get very dirty involving personal lives of politicians

which men donrsquot mind but women do mind a lot aboutrdquohellip[participant A 17)

However in other sectors like education and healthcare there are many

women represented in the labour force

The study also found out that just like any other society one can not ldquohellipstop

some kind of abuse for both males and females There are cases of both

female and male harassment but the law comes in to protect such victims

There are also cases of petty crime and rape involving women either as

perpetrators or victimsrdquohellip [Participant A13]

According to AllAfrica Global Media (2008) the winds of change are blowing

across the island of Mauritius and many men in this traditionally conservative

nation are working hand in hand with women to see that the common sense of

gender equality prevails The absence of women at the decision-making table

usually means the absence of their priorities and needs Irrespective of the

Southern African Develoment Community (SADC) Declaration there are so

few women in politics This is evident from the results of the study which found

that women will rather do health jobs and education than to play the dirty

tricks of politics

Women councillors make up a mere 37 in the Moka-Flacq District Council

This is the lowest figure not only in Mauritius but also in the SADC region

70

This is far from the 2005 30 target not to mention the 50 goal now being

set for the region and included the draft Protocol on Gender and Development

up for review at the August SADC Heads of State Summit ( AllAfrica Global

Media 2008)The results found out that there is also a few representations of

women in business Women do mostly the dirty jobs of caring for children and

their families and do not have the courage to enter the business sector This is

not surprising especially in the SADC region women play the minority role

and are rarely represented at the strategic decision making level hence their

needs are always neglected resulting in women poverty

49 Challenges faced by the country and hence SME investors

Stiff competition from other countries such ashelliphellipldquoBotswana Vietnam and

South East Asia in the textile industry due to cheap labour Maldives and the

Caribbean Islands for tourism difficult in Training enough qualified personnel

in ICT to cope with demand International competition and access to fundsrdquo

hellip[participant B13]

To face these challenges the study found that the country has expanded

tertiary education and formed partnerships with foreign universities such as

ldquoFrench Scientific University which has been running Medical school in

Mauritius for 10 years By the time of this study an agreement had been

reached by Thames valley university (UK) to open up campus in

Mauritiusrdquohellip[participant B15] The aim of the government is to offer high

quality education to students from the region as well as far away like China at

affordable cost and to compete with European universities Further to

71

educational development the study also found out that the country is striving

to create partnerships with ldquoresearch organisations and to create high quality

healthcare so as to benefit from health tourism where would just travel to the

country to get affordable high quality specialised health carerdquohelliphellip [Participant

A3]

Finally results show that there is stiff competition from different sectors of

business and other force which needs to be taken into consideration when

doing business internationally Globalization tends to redistribute economic

rewards in a non-uniform manner a backlash against globalization may occur

in countries often confronted with unpredictable and adverse consequences of

globalization causing them to revert to their own cultural-specific patterns of

economic growth and development (Guilleacuten 2001) It essential to know all

the factors surrounding the business sector and understanding all the

business practices before investing to avoid any loss

72

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

Research on culture and IB is definitely a bdquogrowth‟ area because the business

world is in many ways becoming one The researcher concluded the following

based on study findings

Firstly the cultural diversity and harmony of the island make Mauritius a

unique place in the world It is also known for its social peace political stability

and racial harmony Its steady economic growth over the years coupled with

its nation‟s social cohesion and prosperity ensure continuing development

Secondly Mauritius enjoys a literacy rate over 80 percent Skilled labour

graduates and qualified professional including lawyers engineers IT

programmers consultants accountants and chartered secretaries are

available to suit virtually all business needs in two international languages

English and French Language is therefore not a barrier to foreign investment

In addition academic training at the University of Mauritius and the newly

established University of Technology a comprehensive system of vocational

training through the Industrial and Vocational Training Board (IVTB) ensures a

ready supply of skills in a number of fields such as tourism engineering

electronics jewellery ICT printing and textiles

Thirdly In view of the importance of foreign investment as a source of

sustenance to economic growth the government of Mauritius has taken a

series of policy measures to encourage its flows into manufacturing offshore

73

banking and financial services information technology communication and

tourism As far as foreign investors are concerned Mauritius offers itself as an

attractive destination because several positive features such as political

stability availability of skilled labour and investment-friendly rules and

institutions

Fourthly after a sustained growth path over the last three decades based on

sugar textiles and tourism Mauritius is now shifting gears to move towards a

higher stage of economic development so as to consolidate its position as a

premier international hub Foreign Direct Investment (FDI) has played an

important role in the development of Mauritius and will again be decisive when

the country embarks on high value-added capital intensive and knowledge-

based activities

Fifthly the government plays the role of a facilitator and has endeavoured at

all times to create the most conducive investment environment by enacting

appropriate legislations building state-of-the-art infrastructure investing in

human capital and introducing packages of investment incentives for the

manufacturing financial services and ICT sectors so as to enhance the image

of Mauritius

In this respect the Board of Investment (BOI) is the first contact point for

anyone investing in Mauritius Operating under the aegis of the Ministry of

Finance the BOI was established in March 2001 under the Investment

74

Promotion Act to give a new impetus to foreign direct investment The BOI is

the apex organization for the promotion and facilitation of investment in

Mauritius The primary role of BOI is to stimulate the development expansion

and growth of the economy by promoting Mauritius as a competing business

and service centre It aims at streamlining the legal framework and to make

better provision for the promotion and facilitation of investments in Mauritius It

acts as a facilitator and provides a one-stop shop service to both local and

foreign investors ensuring reliable and speedy processing of applications The

BOI receives processes and approves all applications for investing in

Mauritius It also assists investors in obtaining the necessary secondary

permits and clearances from relevant authorities thus ensuring a speedy

implementation project

Six Mauritius pursues a liberal investment policy and actively encourages

foreign direct investment in all sectors of the economy Attractive packages of

both fiscal and non-fiscal incentives tailor-made to the needs of each priority

area of development are offered to investors Excellent opportunities for

investment in Mauritius exist in various sectors of the economy including

manufacturing information technology knowledge industry regional

headquarters tourism and leisure financial services Freeport activities

amongst other sectors Some of the priority areas are in Information and

Communication Technology which is set to a play a lead role in the economic

development of the country in the medium and long terms The availability of

high bandwidth connectivity (with SAFE Project and international Gateways)

at near global parity in quality and tariff on the one hand and the setting up of

75

dedicated IT habitats including the Cyber city at Ebeacutene on the other hand

plus total Government support to this industry are testimony of the importance

of this industry to Mauritius Others include the manufacturing sector textiles

and apparel the spinning sector electronics and light engineering medicals

and pharmaceuticals agro-business leather products and jewellery and

watches

The export-oriented manufacturing sector has been the backbone of the

Mauritian economy for the past three decades This sector remains a major

constituent of the Mauritian economy in terms of foreign exchange earnings

employment and contribution to GDP and is called upon to continue to play

an important role in the consolidation and diversification of the industrial base

of the country certain

Lastly some incentives provided by government to foreign investors In the

manufacturing sector these include among others

No customs or duty or sales tax on raw materials and equipment

No tax on dividends

No capital gains tax

Free repatriation of profits dividends and capital

50 relief on personal income tax for expatriate staff

New incentives for the ICT Sector consist inter alia of

the availability of tax holiday up to year 2008 for specified

pioneering high-skills ICT operators typically geared towards the

export market such as software development multi-media and to

high-level ICT training institutions

76

customs duty-free import of ICT and similar equipment

50 relief of personal income tax for a specified number of foreign IT

staff

duty-free import of personal belongings of foreign IT staff

effective fast track procedure for procession of visa and work

permits for foreign staff including spouses

From the above the research concludes that Mauritius being a multicultural

society as it is the culture they share does not have a direct impact on

investment in Mauritius because of it is an international hub for business It is

also expected that from the results the situation is not going to change after

time but will keep in this shape for a long since it is the government incentive

to attract more investors into the country However there are certain aspect of

culture eg believes that foreign investors need to understand and take into

consideration This study recommends any prospective investor to make good

investment in to Mauritius without fear

77

CHAPTER SIX

REFLECTIONS FROM THE STUDY

The views derived from this study might not be directly applicable to the whole

region because of variations in socioeconomic settings in various parts of the

Mauritius Also views expressed in this study were obtained mainly from

urban based managers and respondents and might not be similar to rural

based SMEs from the same community or area

Some scholars might not support the sampling techniques used but they

were the most practicable given the circumstances

Legal practitioners in Mauritius were supposed to be part of the sample but

they were hard to reach with some declining to participate

Demographically and geographically the sites were larger than anticipated

given the time and resources available for the study

Lastly the study was limited to the previous 20 years which might have

yielded same generational trend missing the opportunity to get data across

various generations within the sites

78

CHAPTER SEVEN

FUTURE RESEARCH

With more funding and resources a similar study could be conducted

throughout a wider geographic region and encompassing all categories of

SMEs micro small and medium Furthermore with more time a greater

number of interviews could be conducted which would provide richer data that

would be more in depth for conclusive analyses to be made Additionally

participation is voluntary as this study must follow the university Ethics

research policies involving human participants This resulted in questions

sporadically unanswered information such as age may be withheld by the

respondent resulting in missing data or missing data in entire sections of the

questionnaire altogether leading to non response bias This is relevant to

interviews with the participants as well due to time constraints of the study

and with the SMEs in depth interviews could not be conducted therefore

data collected via this method was limited

Moreover mention of all relevant literature was impossible due to time and

length constraints Although there are vast amounts of journal articles in this

area of study only specific articles were chosen relating mostly to SMEs

Two variable statistical analyses are not used because the data collected is

too little to deliver a statistically valid analysis Therefore only single-variable

statistics are presented As well this study is limited to the client contacts of

SEHDA Those enterprises that are not represented in the database are not

represented in the study Also there is not much evidence on when the

database is updated Some of the enterprises represented may no longer

79

exist and some of the new ones information is not available yet in the

database With more time and resources a study that included a wider

random sample size and access to all general SME businesses would be

useful

WORD COUNT 16 969

80

APPENDICES APPENDIX 1 MauritiusData Profile

2000 2005 2006

World view

Population total (millions) 119 124 125

Population growth (annual ) 10 08 08

Surface area (sq km) (thousands) 20 20 20

Poverty headcount ratio at national poverty line ( of population)

GNI Atlas method (current US$) (billions) 444 653 681

GNI per capita Atlas method (current US$) 3740 5250 5430

GNI PPP (current international $) (billions) 891 1239 1334

GNI per capita PPP (current international $) 7510 9970 10640

People

Income share held by lowest 20

Life expectancy at birth total (years) 72 73 73

Fertility rate total (births per woman) 20 20 20

Adolescent fertility rate (births per 1000 women ages 15-19) 39 40 41

Contraceptive prevalence ( of women ages 15-49)

Births attended by skilled health staff ( of total) 100 99

Mortality rate under-5 (per 1000) 18 15 14

Malnutrition prevalence weight for age ( of children under 5)

Immunization measles ( of children ages 12-23 months) 84 98 99

Primary completion rate total ( of relevant age group) 105 97 92

Ratio of girls to boys in primary and secondary education () 98 100 103

Prevalence of HIV total ( of population ages 15-49) 06

Environment

Forest area (sq km) (thousands) 04 04

Agricultural land ( of land area) 557 557

Annual freshwater withdrawals total ( of internal resources)

Improved water source ( of population with access) 100

Improved sanitation facilities urban ( of urban population with access) 95

Energy use (kg of oil equivalent per capita)

CO2 emissions (metric tons per capita) 23

Electric power consumption (kWh per capita)

Economy

GDP (current US$) (billions) 447 629 635

GDP growth (annual ) 40 46 35

Inflation GDP deflator (annual ) 37 48 41

Agriculture value added ( of GDP) 6 6 6

Industry value added ( of GDP) 31 28 27

Services etc value added ( of GDP) 63 66 68

Exports of goods and services ( of GDP) 63 57 60

Imports of goods and services ( of GDP) 65 61 67

Gross capital formation ( of GDP) 26 23 25

Revenue excluding grants ( of GDP) 220 214 215

Cash surplusdeficit ( of GDP) -11 -21 -30

States and markets

Time required to start a business (days) 46 46

Market capitalization of listed companies ( of GDP) 298 416 567

Military expenditure ( of GDP) 02 02

Fixed line and mobile phone subscribers (per 100 people) 39 82 90

Internet users (per 100 people) 73 241 145

Roads paved ( of total roads) 97

High-technology exports ( of manufactured exports) 1 2 24

Global links

Merchandise trade ( of GDP) 82 84 91

Net barter terms of trade (2000 = 100) 100 109 115

External debt total (DOD current US$) (millions) 1713 2153 1997

Short-term debt outstanding (DOD current US$) (millions) 767 1363 1363

Total debt service ( of exports of goods services and income) 181 72 71

Foreign direct investment net inflows (BoP current US$) (millions) 266 39 107

Workers remittances and compensation of employees received (US$) (millions)

177 215 215

Official development assistance and official aid (current US$) (millions) 20 34 19

Source World Development Indicators database April 2008

81

APPENDIX 2

SUMMARY GENDER PROFILE (Mauritius)

Mauritius

Sub-Saharan Africa

Upper middle income

1980 1990 2000 2004 1980 2004 1980 2004

GNP per capita (US$) 1210 2300 3690 4640 652 601 2391 4769

Population

Total (millions) 10 11 12 12 3850 7258 4394 5762

Female ( of total) 507 501 502 503 503 501 515 514

Life expectancy at birth (years)

Male 63 66 68 69 47 46 63 66

Female 69 73 75 76 50 47 71 73

Adult literacy rate ( of people aged 15+)

Male 848 884 954

Female 750 805 942

LABOR FORCE PARTICIPATION

Total labor force (millions) 0 0 1 1 157 299 193 256

Labor force female ( of total labor force)

37 34 34 35 43 42 42 41

Unemployment

Total ( of total labor force)

33 88 102 12

Female ( of female labor force)

36 96 126 134

EDUCATION ACCESS AND ATTAINMENT

Net primary school enrollment rate

Male 91 96 94 68

Female 92 97 96 60

Progression to grade 5 ( of cohort)

Male 97 99

Female 98 99

Primary completion rates ( of relevant age group)

Male 61 105 98 66 95

Female 63 104 102 56 96

Youth literacy Rate ( of people aged 15-24)

Male 912 937 978

Female 911 954 974

HEALTH

Total fertility rate (births per woman)

27 23 20 20 67 53 31 20

Contraceptive prevalence ( of women aged 15-49)

75 26 76 22 69

95

82

APPENDIX 3

DATA COLLECTION FORM FOR THE SURVEY Sitehelliphelliphelliphelliphellip Participant numberhelliphelliphelliphellip MANAGING DIRECTOR CEO MANAGER

Age group -25 26 ndash 35 36 - 45 46-55 56-64 65+

Education Nursery ndash Standard 4

Std 5 ndash 7 (8) Form 1 ndash 2

Form 3 ndash 4 or A level

College University

Employment Yes No Business (what type)

Partnership Whole Citizen

Joint Venture

Age of Company

1-3 years 4-6 years 7-10 years

11-15 Above 15yrs

Number of Employees

10-25 50-99 100-149 150-200

Place of birth

In the constituency

Outside the constituency

Where

Residence Rural Urban Where

Before starting business

After business

Children

Boys Number

Girls Number

Any born a Yes None

Are they in school

Yes No Some

Working Yes No Some

Annual Sales

Balance Sheet

Less than R1000000

R101 000- 250 000

R251 000- 15 million

R 15 million +

Years Employed as CEO

0-3 4-7 8-14 15-19 Over 20 years

83

APPENDIX 4 Qualitative data questionnaire The following questions were used as a guide during the focus group discussions However they were not followed in the strict order or wording as they appear here

SOCIAL INCLUSION EXCLUSION

I am going to ask you questions regarding support you think the society could give foreign investors There is no right or wrong answers it is just about your opinion

a) How do you feel about foreign investors coming to Mauritius

b) How has your friendship with foreign business before and after they arrive in Mauritius

c) Do you keep in touch with foreign businesses around you and prospective investors

d) In your opinion how does foreign business feel about Mauritius

e) Are foreign businesses doing well or badly

f) What support structures or government incentives are there for foreign investors

g) What kind of support would you like to receive from the government

BUSINESS ATTITUDE AND BELIEFS

I am now going to ask you some general questions about business and your opinions about it

a) How would you describe the general business environment

b) Do you find it difficult to do business with people from different countries of the world Why

c) What do you believe the first thing to do on the morning before opening

your business (Local people) Why

d) How best can the Mauritius people be motivated into business How do you get over them

84

e) What areas do local people consider as niche areas for foreign

business

f) How do local people organize their business Why

g) As a local business person what would you consider as abomination of business in Mauritius Why

h) What is the role of women in the business sector

CULTURE

I am now going to ask you questions about the your culture

a) What are your views about business culture in Port Louis

b) What are the challenges of national culture on business practices in your opinion

c) What are the benefits of culture on business practice

d) Do you think foreign investors need to know the local language when investing in Mauritius

e) If you were to advice a foreign investor what would you want them to know about Mauritius

f) How do you think the family daily practice influences business in

Mauritius

g) What business actions of behaviors are sensitive to the local people

h) How best can foreign investors assimilate with the local business people

i) What do local people like to buy on weekends week days public religious holidays

j) What marketing strategies violet the culture of Mauritius ndashwomen naked Eating behavior Etc

85

APPENDIX 5

Introductory letter consent form

TITLE CULTURE AND INTERNATIONAL BUSINESS

ENTREPRENUERSHIP A CASE STUDY OF MAURITIUS

INTRODUCTION

I am Angelinah Boniface a student pursuing Masters of Science in

Information Systems the University of Sheffield United Kingdom I am

conducting a study on the Impact of culture on small and medium

enterprises for my dissertation The study is expected to last 3 months and a

report of the findings will be availed to all interested stakeholders including the

university as part of course requirements

PURPOSE OF THE STUDY

This study is intended to gain insight into views and opinions about

widowhood and inheritance in relation to health and well being of participants

and the community at large Evidence from this study may be useful in future

government and development agencies‟ planning and provision of relevant

interventions for the benefit of the whole community

VOLUNTARINESS AND CONFIDENTIALITY

Your participation in this study is purely voluntary and you can withdraw

at any time should you feel uncomfortable to proceed Information obtained

from this study will be used for no any other purpose other than the

dissertation It will be kept confidential only accessible to the researcher and

pseudonyms will be used to ensure anonymity and confidentiality of

participants and location The researcher will strive to treat all participants

with dignity respect equality and minimise possible harm that might arise

from the study

Agreeing to take part in this study will be treated as your consent to be

involved in this research BUT YOU HAVE THE RIGHT TO WITHDRAW

THE CONSENT

86

RISKS AND BENEFITS

There are no risks to the questions that will be asked If at any point you feel

uncomfortable to answer any question please feel free to ignore such to avoid

any harm

There is likely to be no immediate benefits to you as a participant However

the information obtained in this study will go a long way in informing the

younger generation and wider audience about the culture It might also be

used by the government and other development agencies to plan for

interventions relevant to the needs of widows in your community in the future

based on the evidence you have provided in this study

CONTACTS

The researcher can be contacted at +44 0791263163 lip07acbshefacuk

or linabonyahoocom in case of any questions issues

In case of any problems that need university attention my supervisor can be

contacted at kalbrightshefacuk

PLEASE DONrsquoT TAKE PART IN THIS STUDY IF YOU ARE BELOW 18

YEARS OF AGE

Thank you very much for your anticipated cooperation

Researcher‟s signature Participant‟s signature

helliphelliphelliphelliphelliphelliphelliphelliphellip helliphelliphelliphelliphelliphelliphelliphelliphelliphelliphelliphellip

87

REFERENCES

Bhagat RSet al (2002) Cultural variations in the cross-border transfer of

organizational knowledge an integrative framework Academy of

Management Review 27(2) 204ndash221

Boyacigiller NA amp Adler NJ (1991) ldquoThe parochial dinosaur organizational

science in a global contextrdquo Academy of Management Review 16(2) 262ndash

290

Bowling A (ed) (2002) Research methods in health Investigating health and

health services Buckingham Open University press

Dabee R and Greenway D (2001)The Mauritian Economy A Reader

PalgraveNew York

Dawson C D (2002) Practical research methods A user friendly guide to

mastering research techniques and projects Oxford How to Books Ltd

Denscombe M (ed) (2007) The good research guide for small scale social

research projects Berkshire Open University Press

Denscombe M(ed) (2003) The good research guide For small scale social

research projects Maidenhead Open University Press

Economic And Social Research Council (2005) ESRC research ethics

framework [online]

httpwwwesrcsocietytodayacukESRCInfoCentreopportunitiesresearch5

Fethics5Fframework [ Accessed May 05 2008]

88

Gilbert N (ed) (2001) Researching social life London Sage Publishers

Grbich C (1999) Qualitative research in health An introduction London

Sage publications

Hunter D amp Lang T (1993) The Leeds declaration Leeds Nuffield Institute

for Health

Neuman L W(ed) (2000) Social research methods qualitative and

quantitative approaches Needham Heights MA Allyn amp Bacon

Maynard M amp Purvis J (1994) Researching womens lives from a feminist

perspective London Taylor and Francis group

Muuka GN (2002) Africas informal sector matters a challenge to scholars

to close the knowledge gap Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

Business and Development International Conference Port Elizabeth April 3-

6 pp1-6

Southwood R (2004)The impact of ICT on SMEs ndash a motor for future

economic growth in hard-pressed times [Online] Balancing Act news update

wwwbalancingact-africacomnewscurrent1html [Accessed 26 January

2008]

Machacha L (2002) Impact of information technology on small and medium

enterprises (SMEs) in Botswana Proceedings of Expanding the Horizons of

African Business and Development The International Academy of African

89

Business and Development International Conference Port Elizabeth April 3-

6 pp277-82

Organisation for Economic Co-operation and Development (OECD)

(2000)OECD study highlights role of small and medium enterprises in job

creation Organisation for Economic Co-operation and Development

[Online]wwwoecdorgmediapublishpb00-11ahtm [Accessed 8 July 2008]

Commonwealth Secretariat UK (2006) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius London Commonwealth

Secretariat

Reed DM (1998) Using the Business Excellence Model in Small Service

Business British Quality Foundation

Taylor AW amp Adair RG (1994) ldquoEvolution of Quality awards and self

assessment practices in Europe a case for considering organisation sizerdquo

Total quality Management 5 (4) 227-237

United Nations (1993) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York

Johanson J amp Wiedersheim-Paul F (1995) The Internationalization of the

Firm - Four Swedish Cases Journal of Management Studies 20 (3) 123-139

90

Chui ACW Lloyd AE and Kwok CCY (2002) The determination of

capital structure is national culture a missing piece to the puzzlerdquo Journal of

International Business Studies 33(1) 99ndash127

Earley PC amp Gibson CB (2002) Multinational Teams A New Perspective

Lawrence Earlbaum and Associates Mahwah NJ

Gibson CB (1999) ldquoDo they do what they believe they can Group-efficacy

beliefs and group performance across tasks and culturesrdquo Academy of

Management Journal 42(2) 138ndash152

Hofstede G (1980) Cultures Consequences International Differences in

Work-Related Values Sage Newbury Park CA

SMIDO (2006)A new Vision For SMEs Development Mauritius

Government Printer Port Louis

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Stone A (1997) SMEs and Technology why should we make special efforts

to help World Bank

Bhagat RS et al (2003) Knowledge in Cross-Cultural Management in Era

of Globalization Where Do we Go from Here in D Tjosvold and K Leung

91

(eds) Cross-Cultural Management Foundations and Future Ashgate Englan

155ndash176

Cairncross F (2001) The Death of Distance Harvard Business School Press

Boston MA

Commonwealth Secretariat UK (2005) Looking Outward A study of small

Firms Exports Policies ampInstitutions in Mauritius Commonwealth Secretariat

Drucker PF (1995) Managing in a Time of Great Change Truman Talley

BooksDutton New York

Guilleacuten M (2001) ldquoIs globalization civilizing destructive or feeble A critique

of five key debates in the social science literaturerdquo Annual Review of

Sociology 27 235ndash260

Gibson CB and Cohen SG (2003) Virtual Teams that Work Creating

Conditions for Virtual Team Effectiveness Jossey-Bass San Francisco

Grazol P et al(2004) ldquoThe Effect of Culture on IT Diffusion Email and Fax in

Japan and the US Information Systems Researchrdquo Journal of International

Consumer Marketing 16 4 pp 29-64

Greider W (1997) One World Ready or Not Crown Business New York

92

Gertler MS (1997) The Invention of Regional Culture In Lee R and Willis J

eds Geographies of Economies London Arnold

Govindarajan V and Gupta AK (2001) The Quest for Global Dominance

Transforming Global Presence into Global Competitive Advantage Jossey-

Bass San Francisco

Haire M et al(1966)Managerial Thinking An International Study Wiley

New York

Heuer M et al(1999) Cultural stability or change among managers in

Indonesia Journal of International Business Studies 30(3) 599ndash610

Hofstede G (1997) Cultures and Organizations Software of the Mind New

York McGraw-Hill

Hofstede GH (2001) Cultures Consequences Comparing Values

Behaviors Institutions and Organizations Across Nations London Sage

Publications

Hoecklin L (1995)Embedded Autonomy States and Industrial

Transformation Princeton NJ Princeton University Press

93

IBP USA (2002) Mauritius Investment and Business Guide IB Tauris and Co

LTD London

Kerr C et al (1960) Industrialism and Industrial Man Harvard University

Press Cambridge MA

Kirkman BL amp Shapiro DL (2000) ldquoUnderstanding why team members

won‟t share an examination of factors related to employee receptivity to team-

based rewardsrdquo Small Group Research 31(2) 175ndash209

Lisenda L (2003) Small and medium-scale enterprises in Botswana their

characteristics sources of finance and problems BIDPA Gaborone

Mauritius Chamber of Commerce and Industry ldquo Country Profilerdquo(Sep 2005)

Meredith GG (ed) (2004) Small Business Management in Australia

McGraw-Hill Sydney

Mistry PS (1999) ldquoCommentary Mauritius ndash quo vadisrdquo African Affairs 98

(393) 551ndash69

Mullins LJ(ed) (1999) Management and Organizational Behavior 5th ed

London Financial Times Pitman

94

Myers MDamp Tan FB (2002) ldquoBeyond Models of National Culture in

Information Systems Researchrdquo Journal of Global Information Management

10 (1) 112-134

Putz R (2000) ldquoCulture and entrepreneurship views from the middle and

lower level managersrdquo Journal of Business Ethics 22 145- 153

Scottish Economic Statistics Scottish ExecutiveONS IDBR (2005)Size

Analysis of Welsh Business SDR 692004Statistical Press Release URN

0440

Straub D et al (2002) rdquoTowards A Theory-Based Measurement of Culture

Journal of Global Information managementrdquo 10 (1)

Schaeffer RK (2003) Understanding Globalization The Social

Consequences of Political Economic and Environmental Change Rowman amp

Littlefield Lanham MD

SMIDOA new Vision For SMEs Development(May 1996)

SMME Task Force Report (1998) Small medium and micro-enterprises task

fore force report Government Printer Ministry of Commerce and Industry

Sondergaard M amp Hofstede G (1994) ldquoA study of Reviews Citations and

Replicationsrdquo Organization Studies 15 (3) 447-456

95

Schein EH (1992) Organizational Culture and Leadership Jossey-Bass

San Francisco

Stone A ( 1997) SMEs and Technology why should we make special efforts

to help (World Bank 1997)

Statistical Press Release (2005) URN 0592 Office for National Statistics

Weisinger JYamp Trauth EM (2002) ldquoSituating Culture in the Global

Information Sectorrdquo Information Technology amp People 15 (4) 306-320

United Nations (2005) Small and Medium -sized Transnational Corporation

Role Impact and Policy implications United Nations New York