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Family ties and firm performance: How cousin marriage traditions shape informal businesses in Africa

A new study in the Strategic Entrepreneurship Journal examines how long-standing cultural practices, specifically cousin marriage traditions, continue to influence business outcomes in sub-Saharan Africa's informal economy.

Researchers Saul Estrin (London School of Economics), Tomasz Mickiewicz (Aston University), and Peng Zhang (University of Sheffield) analyzed survey data from over 3,000 informal entrepreneurs across eight African countries. They explored how pre-colonial family structures—especially the practice of marrying within the extended family—affect key indicators of business performance, such as employment and revenue.

Cousin marriage, defined in the study as the practice of marrying within a kinship group, has deep historical roots in many African ethnic communities. The tradition reinforces in-group identity and tightly knit social networks, which in turn influence how small businesses make decisions about hiring and growth.

The researchers found that firms operating in areas with a historical tradition of cousin marriage were more likely to use additional financial resources to hire relatives or in-group members, leading to greater employment increases but smaller gains in revenue. In contrast, firms in communities without such traditions tended to prioritize revenue growth and acted more individualistically in their business decisions.

"These findings suggest that family systems and social expectations play a significant role in shaping how informal entrepreneurs allocate resources," said Zhang. "Even when cousin marriage is no longer widely practiced, its underlying norms—like the emphasis on supporting the in-group—can persist and continue to influence behavior."

The study also explores how colonization altered these long-standing family norms. The authors found that British colonial rule, with its emphasis on individualistic legal and administrative structures, was associated with a weakening of the cousin marriage tradition in many areas. These changes, however, varied by region and were influenced by competing cultural forces, including Islamic and Christian missionary activity.

The persistence of cultural norms over generations—even after formal practices change—highlights the importance of understanding historical context in business environments. Informal firms, which make up a large share of the African economy, often operate without formal regulation and rely heavily on community and family structures for support.

The authors emphasize that the implications extend beyond the informal sector. Multinational companies and policymakers working in sub-Saharan Africa should recognize that social institutions like cousin marriage traditions may influence the behavior and goals of local business partners and subcontractors.