Historical shocks and community-based enterprises: the slave trades, family dynamics, and social entrepreneurship in Africa

Abstract

ABSTRACT This study investigates how exposure to traumatic historical shocks shapes the emergence of community-based enterprises across geographic regions in Africa. Leveraging a family embeddedness theoretical lens in the context of the traumatic background of the historic African slave trades, we theorize that the extent of slave exports is adversely related to cohesion and trust in family institutions in the affected regions, thereby reducing the likelihood of community-based enterprises in the modern era. Nevertheless, we also conjecture that this legacy of social structure disintegration and mistrust created by historical trauma from the slave trades can be relieved through contemporary family embeddedness in entrepreneurial activity. Empirically, we test these hypotheses by merging slave export data from 500 years of the African slave trades with data on 4,685 modern social enterprises across 49 African countries. The results corroborate the main hypothesis and show that the effect of slave exports on the likelihood of community-based enterprises is contingent on family funding and female involvement in social enterprises. These findings highlight the central role of familial dynamics in the link between historical trauma and modern entrepreneurial strategy.