11 Chi.-Kent J. Int'l & Comp. L. 1 (2011)

handle is hein.journals/chkjicl11 and id is 1 raw text is: 





     DOING BUSINESS UNDER THE HOT SUN: HOW SMALL
 FIRMS DO BUSINESS AND PROCESS CONFLICTS IN KENYA

                                        Elin Cohen*

       Considerable amounts  of money have been spent on reform projects aiming to strengthen

institutions supporting business transactions in developing countries. To be able to evaluate the

type and extent of reforms needed, this article presents a thick description of business practices

among  smaller businesses in Nyanza Province, Kenya. Entrepreneurs in developing countries

form long-term relational contracts with a very limited number of suppliers, with whom disputes

are rare and generally resolved without third party involvement. However, when entrepreneurs

are unable to rely upon relational contracts with their customers, disputes are common and often

remain unresolved. Due to the limited availability of suitable fora, firms are cautious to expose

themselves to riskier transactions. Private mediation options have emerged in certain locations,

but have, at present, limited reach. This article expands our understanding of business practices

among  smaller businesses in Africa and highlights institutional gaps, which if addressed, could

prevent disagreements and facilitate dispute processing.



                                        Introduction

       It is well understood that smaller enterprises play a role in propelling economic

development  on the Sub-Saharan continent.' Studies from Sub-Saharan Africa estimate that



*Elin Cohen holds a JSD from Stanford Law School and is currently a consultant and a part-time lecturer at the
University of Washington School of Law. I am grateful to Stewart Macaulay, Deborah Hensler, Thomas Heller and
Bruce Owen for valuable comments and suggestions. I would also like to thank John Marie Mbeche and Dennis
Willa for excellent research assistance and the editors at the Journal of International and Comparative Law at
Chicago-Kent College of Law for their helpful comments. I would also like to thank the Fulbright-Hays Doctoral
Dissertation Research Award for funding this research project.
1 See Oliver Masakure, et al., Performance of Microenterprises in Ghana: A Resource-Based View, 16 J. SMALL
Bus. & ENTERPRISE DEV. 466 (2009); Michael McPherson, Growth of Micro and Small Enterprises in Southern


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