Network development mechanisms of immigrant entrepreneurs: insights from an emerging economy Open Access

The global phenomenon of immigrant entrepreneurship–the pursuit of entrepreneurial activities by migrants in the host country (Dabić et al., 2020) - has recently garnered much scholarly and practitioner attention (Bates, 1997; Glinka et al., 2023; Ndofor and Priem, 2011). Immigrant entrepreneurship is an important economic phenomenon which creates employment opportunities for locals in a host country (Baycan-Levent and Nijkamp, 2009; Bird and Wennberg, 2016; Fubah, 2023). Reducing high unemployment rates has become a common practice in many countries, particularly in emerging economies (Adom and Ackom, 2023; Fubah and Moos, 2022; Urban et al., 2024). Research indicates that immigrant entrepreneurs (IEs) are a primary source of economic revitalisation and renewal, particularly in highly developed economies with an increase in ageing populations and declining birth rates (Ndofor and Priem, 2011).

Despite these important roles, IEs face numerous challenges in the host country. These challenges include (1) discrimination (Yasin and Hafeez, 2023); (2) little or no access to finance and credit facilities (Bates, 1997; Malki et al., 2022), and (3) lack of government support (Basu, 2011; Muchineripi et al., 2019). These challenges are detrimental to IEs’ business development (Awotoye and Singh, 2018; Azmat, 2013). As a result, IEs resort to establishing networking ties as a means of combating these challenges (Fubah and Moos, 2025).

Emerging literature on the topic has focused on immigrant entrepreneurship and the role of family resources (Bird and Wennberg, 2016); the role of social capital/networks (Gomez et al., 2020); cross-cultural participation (Walsh and Cooney, 2022); economic development (Huang and Liu, 2019), and context (Kloosterman, 2000). While these different streams of literature are emerging, networks are frequently mentioned in immigrant entrepreneurship literature (Brzozowski and Cucculelli, 2020; Glinka et al., 2023). Moreover, the literature suggests that networks are very important for entrepreneurs as they provide them access to critical resources, such as start-up capital, human resources, and advice (Abu-Rumman et al., 2021; Witt, 2004). However, for IEs, networks are especially crucial, considering their business operations in uncertain environments. Thus, networks could help them overcome challenges, such as the liability of foreignness and “outsidership” (Brzozowski and Cucculelli, 2020; Stoyanov et al., 2018). Moreover, networks also play a key role in enhancing the career capital of IEs; this includes human capital (skills and knowledge); social capital (social networks and ties), and cultural capital (norms and behaviours in the host/home country) (Fubah and Moos, 2025; Light et al., 2017; Yadav, 2025). Therefore, through networks, IEs can gain access to mentors, service providers and resources, in addition to important insider knowledge about local business practices, which all enhance and accelerate their adaptation and legitimacy in the host country. This reinforces other core success factors, such as access to finance, advice, opportunities and institutional trust, which are crucial in the survival of immigrant entrepreneurial businesses.

Moreover, emerging market contexts are characterised by institutional voids (Dabić et al., 2020). These are considered the absence, underdevelopment or malfunctioning of institutions that enable and support economic activity, which could negatively affect IE’s business operations (Khanna and Palepu, 1997). Institutional voids in emerging economies, such as red tape, administrative delays, political instability, corruption and limited financial markets (Adomako et al., 2019), pose significant challenges for entrepreneurs (and immigrants) (McCarthy and Puffer, 2016). IEs may depend on their ability to form ties (networks) with resource providers to overcome these challenges and have access to resources for business operations (Ge et al., 2019a). Moreover, research suggests that entrepreneurs, including immigrants, must constantly develop exchange relationships with others in the market to obtain the necessary resources needed to operate their ventures (Fubah and Moos, 2025; Stephens, 2013).

Thus, networks are crucial in providing resources for migrant entrepreneurs (Lassalle et al., 2020; Light et al., 2017; Wang and Altinay, 2012). Despite this importance, limited research addresses how networks are developed, especially in emerging economies where IEs depend on networks for resources. This knowledge gap limits the understanding of the specific mechanisms used by IEs in developing their networks in these contexts. Moreover, exploring the network development mechanisms of migrant entrepreneurs is essential, as this research could provide context-specific insights that would drive network development literature further. Accordingly, the research question for this study is: What mechanisms do IEs use to develop their networks for business operations in emerging economies?

This study, therefore, aims to increase knowledge of the different mechanisms that IEs use to develop their networks. We anchor our study on the social capital theory (SCT). We, therefore, reviewed extant literature on the topic, collected data for the study using a qualitative research method and analysed the data thematically (Clarke and Braun, 2017). This study contributes to our knowledge and understanding of IEs’ network development mechanisms by integrating the literature on immigrant entrepreneurship, networks and the SCT. Moreover, our study corroborates prior findings on immigrant entrepreneurial network development, whilst also unravelling new contextual insights on network development mechanisms that are less prevalent in immigrant entrepreneurship literature. The study makes an empirical contribution by focusing on IEs and the mechanisms that they use to develop their networks in the South African (SA) context. Finally, the study’s findings have practical relevance for IEs in emerging economies, specifically in SA. IEs in this context can leverage the relationship-based and performance-based network development mechanisms unravelled in this study to develop networks which would help them overcome institutional voids that affect their business operations.

The remainder of the paper is structured into six sections. Section 2 focuses on the theoretical framework, covering the SCT and its applicability to this study. Section 3 provides the literature review, focusing on the role of networks, entrepreneurial network development and immigrant entrepreneurship in SA. Section 4 regards the methodology used to collect data to answer the research question. Section 5 presents the findings, and finally, Sections 6 and 7 provide a discussion and conclusion to the paper.

The SCT has been used in this study to understand the network development mechanisms of IEs. It highlights how resource mobilisation, through a web of relationships, can foster entrepreneurial activity–especially in a context of institutional voids. In this light, the influence of social capital on entrepreneurial activities is of long-standing theoretical interest, since it facilitates access to resources, networks and other critical factors that are crucial in business success (Kwon et al., 2013). Bourdieu (1985) first defined the SCT as “the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalised relationships of mutual acquaintance or recognition”. Thus, it is also the potential resources that are linked or can be derived from a network of relationships with mutual contacts (Nahapiet and Ghoshal, 1998). The theory is based on the premise that a network can provide its members with access to different resources that are embedded within the network (Bourdieu, 1985; Nahapiet and Ghoshal, 1998).

Social capital has different dimensions, with entrepreneurship research predominantly converging on structural and relational dimensions (Granovetter, 1973; Urban et al., 2024). The structural dimension highlights the size of a network, the strength of ties between network members and the position of each individual within the network (Nahapiet and Ghoshal, 1998). The relational dimension, on the other hand, focuses on the different types of personal ties that individuals develop with others through their interactions, as well as the resources embedded in those relationships (Kwon et al., 2013; Nahapiet and Ghoshal, 1998). Thus, SCT influences entrepreneurship by providing access to critical resources for entrepreneurs through a web of relationships.

The SCT is particularly applicable in the context of this present study since social capital serves as a key resource for IEs, especially in the African contexts where they face a myriad of challenges (Fubah and Moos, 2025; Urban et al., 2024). These entrepreneurs, while operating in new markets, often face constraints. These include language barriers; difficulty in getting formal employment; unrecognised qualifications, and limited access to financial resources. As such, they rely heavily on their (social) networks to mobilise resources and start a business for survival (Gomez et al., 2015a). Thus, in the absence of well-functioning institutions that can provide support, IEs strategically build and maintain networks/relationships that offer access to key advice, support, knowledge and human capital. By doing so, they effectively and efficiently use social capital to compensate for institutional voids in the host country.

IEs are often considered to be less connected in comparison to locals in the host country. As a result, Tubadji et al. (2020) posit that they are more likely to require network links and social capital to survive than locals. Furthermore, some immigrants who want to start a business usually have some resources on hand; however, they still require external resources from their network contacts to successfully produce and deliver products and services to the market (Glinka et al., 2023; Turkina and Thai, 2013). In this paper, networks are defined as “sets of interpersonal ties that link migrants, former migrants, and non-migrants in origin and destination areas through the bonds of kinship, friendship, and shared community origin” (Massey, 2019, p. 396).

Networks offer IEs invaluable and unique resources, making them fundamental to the business’s growth and success (Williams and Efendic, 2019). Networks are increasingly being valued by IEs due to their social capital, which facilitates the flow of valuable information (Ratten and Pellegrini, 2020). Moreover, research suggests that social capital is an important component of any entrepreneurial network (Davidsson and Honig, 2003). Social capital is often important for IEs, as it is the only type of capital that they can generate (to a larger extent) in comparison with resource-rich individuals (Granovetter, 2000). Social capital exists in different forms, namely bonding, bridging and linking social capital (Putnam, 2000).

Bonding social capital refers to the ties and links between individuals who are close and know each other well, such as immediate family members, close friends and neighbours (Bhandari and Yasunobu, 2009; Putnam, 2000). Research suggests that close ties of bonding social capital give IEs access to their network resources, and such resources are vital for the establishment of new ventures (Gomez et al., 2015b). Additionally, it provides access to emotional support and practical resources, which are all vital for IEs operating in unfamiliar contexts that are sometimes characterised by institutional voids (Katila and Wahlbeck, 2012; Light et al., 2017). Moreover, bonding networks have been found to help IEs get by; they provide rules, regulations, norms and trust that facilitate collective action (Deakins et al., 2007; Gomez et al., 2015b).

Bridging social capital refers to distant ties, relationships or networks between individuals, such as loose friendships and workmates (Bhandari and Yasunobu, 2009; Katila and Wahlbeck, 2012). Bridging social capital is important for IEs because it provides them with access to critical information about the host country’s labour market opportunities (Granovetter, 1973). Moreover, by facilitating the establishment of ties between diverse groups, bridging social capital enhances collaboration; exchange of information; ideas; opportunities, and access to diverse resources essential for IEs business operations (Deakins et al., 2007; Katila and Wahlbeck, 2012).

Linking social capital is considered the ties and networks between individuals who occupy very different social positions and power (Woolcock, 2001). It involves the links between individuals and institutions or individuals in authority–for instance, government officials, business leaders and community leaders (Bhandari and Yasunobu, 2009). Thus, it facilitates access to critical resources and support that may not be available in IE’s immediate networks. Networks also facilitate business innovation processes (Sahin et al., 2009). They help IEs in finding a business location and human capital, and provide financial assistance in the form of informal loans (Light et al., 2017). Moreover, networks provide cheap labour, advice and can also facilitate connections to other players who may provide critical resources to the IE (Glinka et al., 2023).

IEs are also embedded in networks both in the home and host countries from which they can leverage resources for their business operations (Kloosterman, 2000; Yang and Girotto, 2024). Some research also emphasises that in the host country, migrant entrepreneurs tend to be embedded both in ethnic (community) networks and local networks (Beckers and Blumberg, 2013; Brieger and Gielnik, 2021). In this light, ethnic networks (co-ethnic communities in the host country) play an instrumental role for IEs. As the literature indicates, ethnic (and co-ethnic) networks in the host country provide IEs with “access to co-ethnic resources, such as business advice, labour, and products, and maintain relationships with co-ethnic suppliers and customers” (Wang and Altinay, 2012, p. 9). Ethnic networks also facilitate the formation of relationships between ethnic IEs, thus enabling the flow of ethnic resources between them (Chen and Redding, 2017; Waldinger, 1986). It provides a market for IEs in the host country, thus enabling IE to overcome challenges, such as limited access to host country customers (Zolin et al., 2016). Moreover, while IEs initially rely on their ethnic networks after arrival in the host country, they often transition to more local and business networks over time to increase their performance (Light et al., 2017; Portes and Manning, 2019). Moreover, research has found that IEs who build networks with local businesses, institutions, and professional associations can increase their access to resources (Bolzani and Scandura, 2024).

IEs also have relationships and kinship ties in their home country–transnational networks–which can facilitate transnational entrepreneurial activities (Brzozowski and Cucculelli, 2020). Transnational networks enable IEs to obtain resources useful for business operations in the host country (Kariv et al., 2009). Transnational networks include a mix of family, social, business and ethnic ties that the IE established in the host country before migrating (Kariv et al., 2009; Lassalle et al., 2020). Thus, IEs with multiple transnational networks in the home country can tap into any of their networks when needed to leverage resources for use in the host country. The variation in the performance of immigrant businesses is due to the different levels of networking (or different types of networks) they engage in (Deakins et al., 2007; Zolin and Schlosser, 2013). Thus, developing and being part of the multiple networks that the host country can provide ensures access to diverse social capital, which can be used to compensate for a lack of access to formal institutional support or the presence of weak and malfunctioning institutions.

Based on the above, extant literature reveals that IEs rely heavily on networks due to the critical role they play in their business survival and performance. In the next section, we focus on how entrepreneurs, including immigrants, develop their networks; thus, we consider network development mechanisms.

Researchers have explored the different networking strategies and behaviours of entrepreneurs in order to understand how different networks emerge (see, for example, Engel et al., 2017; Kaandorp et al., 2020; Shane and Cable, 2002; Vissa, 2012). It takes considerable time and effort to develop a successful and beneficial network, which is frequently based on trust and understanding. As such, it is more cost-effective to focus on existing networks because the returns may be higher than developing new networks (Stephens, 2013). This may benefit existing entrepreneurs; however, aspiring entrepreneurs must focus on building new networks that will help them run their businesses. It is important to emphasise that existing entrepreneurs may also have to broaden or deepen their current (or existing) networks to gain access to critical resources which they may lack access to (Engel et al., 2017; Vissa, 2012).

Hallen and Eisenhardt (2012) assert that if an entrepreneur develops networks efficiently, they avoid unnecessary failures or undesirable partners. IEs who develop their networks efficiently are likely to have quicker access to critical resources for their businesses. Thus, superior network outcomes and business performance are guaranteed through “tie formation efficiency” (Hallen and Eisenhardt, 2012, p. 35). As the literature indicates, not all firms have the resources they need for their operations. Thus, they tend to depend on and form ties with other firms in the market for critical resources over which they have little or no control (Kwon and Adler, 2014). This aligns with the SCT’s premise, which asserts that networks provide access to critical resources embedded within relationships, enabling members to leverage these resources for their business developments (Bourdieu, 1985; Nahapiet and Ghoshal, 1998) - especially in contexts of institutional voids. It can, therefore, be argued that entrepreneurs form networking ties primarily to have access to critical resources.

Research indicates that networks can be developed by engaging with subcommunities of the same nationality, with the business community, or with higher institutions of learning (Stephens, 2013). These sub-communities (for instance, ethnic networks) are likely to provide ethnic resources to network participants, such as ethnic human capital. Similarly, such sub-communities may provide a market for ethnic products in the host country. Additionally, several scholars posit that networks can be developed through trust (Chen and Redding, 2017; Wang et al., 2019). Relationships built on trust are key to developing a sustainable business. They provide access to valuable resources needed by businesses to survive and grow (Wang et al., 2019). Literature shows that when individuals trust one another, they are more likely to engage in cooperative relationships and activities, and this in turn paves the way for further trust and cooperation (Smith and Lohrke, 2008). Moreover, when trust exists, individuals are more likely to exchange ideas and knowledge freely. This drives entrepreneurial activities and possibly leads to better performance. However, in an instance where there is no trust, individuals may not be willing to share ideas or exchange resources, which are critical to entrepreneurial success (Chen and Redding, 2017).

Other scholars report that networks can be developed through referrals (Vissa, 2012) or initiating contact (Kaandorp et al., 2020). In this regard, entrepreneurs actively search for partners to engage in networking relationships by seeking referrals from their contacts or by being referred to those also seeking networking partners by their contacts. Research has highlighted that entrepreneurs develop their ties through social bonds and social interactions with individuals such as entrepreneurs, friends, relatives, clubs and social associations (Desta, 2015). This view is supported by Ibarra and Hunter (2007), noting that a good way to build networks is to start by connecting two people who will benefit from meeting each other. These networks are created in professional associations, alumni forums, personal clubs with friends and other ethnic group forums. Rocha et al. (2021, p. 3) also posit that “entrepreneurs frequently use events such as hackathons, conferences, meetups and informal drinks as a means of building their social networks and social capital”.

Entrepreneurs need networks at every stage of their business operations; additionally, their network development mechanisms and processes may vary across these stages. As literature posits, it is often difficult to determine the business’s current stage in the ‘life cycle’ (Davidsson and Honig, 2003; Klyver and Hindle, 2007). In this regard, since social networks are dynamic (Batjargal, 2006), it is often assumed that they play a role across the various stages of the entrepreneurial life cycle (Fatoki and Oni, 2014; Klyver and Hindle, 2007). There is, however, a consensus that those searching for entrepreneurial opportunities in the early stages of the entrepreneurial journey depend on different social networks (Batjargal, 2006; Davidsson and Honig, 2003; Fatoki and Oni, 2014). Thereafter, when they start a business and are seeking finances, they rely heavily on family networks and strategic networks, for instance, with banks and other funding institutions (Klyver and Hindle, 2007). As the business grows and matures, it depends on professional, business and managerial networks (Fatoki and Oni, 2014). This, therefore, implies that network development mechanisms can change as the business matures and gains legitimacy.

In summary, existing literature shows that networks are crucial, particularly for IEs, since they are operating their businesses in contexts characterised by institutional voids and uncertainty. These entrepreneurs can leverage resources from their networks in such contexts to overcome barriers and stay in the market. The literature also highlights various mechanisms that entrepreneurs, including immigrants, can use to develop their networks. Therefore, IEs must engage with these mechanisms to effectively establish networks which can provide the necessary resources for survival in contexts characterised by institutional voids and uncertainty.

Migration within Africa continues to rise due to political conflicts in countries such as Somalia, Congo, Burundi, Cameroon, and Nigeria. SA, with its well-developed economy and appealing government policies, has become a new home for individuals fleeing these conflict zones (Fubah, 2023). While some people move to SA to seek refuge, others move to take advantage of favourable job and business opportunities. When these migrants arrive, they settle in major cities such as Johannesburg, Durban, Cape Town, and Pretoria (also known as Tshwane), where they engage in formal and informal trading. Those with qualifications and proper documentation seek formal employment (Fubah and Moos, 2022). However, evidence also indicates that a majority of immigrants arrive in SA unskilled, while some enter the country through porous borders. This implies that they lack proper documentation for formal employment and, as a result, they resort to informal trading on the streets (Moyo et al., 2018). Thus, the majority of the migrants in SA become business owners–IEs.

IEs play an important role in the SA economy, such as employing SA citizens (Fubah, 2023). By doing so, they reduce the high unemployment rate, which was at 33.50% in the second quarter of 2024, an increase from 32.90% in the first quarter of 2024 (Trading Economics, 2024). IEs also foster innovation, whilst contributing to the economic development of SA through the taxes they pay for their business operations. Despite these efforts, evidence suggests that IEs in SA are excluded from small business government assistance (Fubah, 2023).

IEs in SA face several challenges, including a lack of access to finance or credit facilities and language barriers, among others (Tengeh and Nkem, 2017). As research indicates, informal institutions dominate in emerging markets (including SA) (Chipp et al., 2019; Rivera-Santos et al., 2015). This is attributable to the prevalence of institutional voids, which negatively affect entrepreneurs, including immigrants. Specifically, informal institutions and networks play a key role in compensating for weak institutions in emerging market contexts (North, 1990). Entrepreneurs in these contexts, therefore, often rely on their personal, community and ethnic ties for access to resources, human capital and information (Fubah and Moos, 2025). Thus, networks in these contexts substitute for formal institutions (Brüderl and Preisendörfer, 1998). In developed contexts where formal institutions are well established, networks tend to be well structured and focus on strategic partnerships (Granovetter, 1985). Informal networks in this context complement formal institutions and provide access to advice, business opportunities and mentorship. However, reliance on them for business operations is limited (Burt, 1992).

Thus, closing institutional voids requires the development of networking relations between diverse market actors, including IEs (Chipp et al., 2019). Moreover, research highlights that networks provide critical resources to IEs (Brzozowski and Cucculelli, 2020; Fubah and Moos, 2025; Glinka et al., 2023) that would otherwise be inaccessible due to malfunctioning institutions (Chipp et al., 2019; Khanna and Palepu, 1997). In addition, networking has been reported by prior research as a key strategy used by entrepreneurs to overcome institutional voids in emerging markets such as China (Ge et al., 2019b). Moreover, scholars highlight that alliances and other informal connections compensate for weak formal institutions in emerging markets, facilitating both entry and internationalisation (Chandra et al., 2020). In contexts where formal institutions are weak and unreliable (such as China, India and Bangladesh), entrepreneurs are often propelled to rely on their networks for support and business operations (Mair et al., 2012; Nicholson and Svystunova, 2022; Puffer et al., 2010). However, despite their important role, there is still insufficient research on how IEs develop the networks to gain access to resources in a context characterised by institutional voids, such as SA. This study, therefore, sets out to fill this gap by exploring the network development mechanisms of IEs in this context.

This study adhered to an interpretivist philosophy and employed a qualitative research methodology in which the words, opinions, and perceptions of interview participants were thoroughly explored rather than quantified (Creswell, 2014). The interpretivist approach requires a small sample size while focusing on an in-depth exploration of a phenomenon, ensuring richness in data collected from participants (Alharahsheh and Pius, 2020). A generic qualitative design was chosen for this study as it is appropriate for gathering detailed and in-depth information about a specific topic (Leedy and Ormrod, 2016), namely, how IEs develop their networks in the host country. We specifically used a qualitative method due to the contextual relevance of immigrant entrepreneurship and its network developments (Dabić et al., 2020). Moreover, the application of qualitative methods is typical for under-studied phenomena; thus, our topic meets that criterion. Our study was explorative, aiming to gain significant insight into the network development mechanisms of IEs operating their business in an emerging economy context (SA).

Data for the study were collected from 25 IEs operating their ventures in the Gauteng Province (GP) of SA. The businesses had to be established, namely ventures that paid wages and salaries for at least 42 months (Bosma et al., 2021). GP is one of SA’s provinces, the smallest by land area but the most populous. The majority of immigrants settle in GP’s cities, such as Johannesburg and Pretoria, where they operate their ventures. The majority of these migrants come from sub-Saharan African (SSA) countries, especially SA’s neighbouring countries (Urban et al., 2024). Unlike other host countries such as the United States of America (USA), the United Kingdom (UK), Germany, and Canada, where formal institutions and policies support the integration of IEs, SA presents a more complex institutional setting. Xenophobic attitudes, discrimination, and violence have created significant barriers to the social inclusion and integration of IEs, particularly those from the African continent (Muchineripi et al., 2019; Urban et al., 2024). As such, many IEs rely on their ethnic and social ties, which provide safe spaces, trust, and resources (Fubah and Moos, 2025) that may not be accessible through formal channels. To address these challenges, IEs are actively learning local languages, employing locals, and engaging in community initiatives as ways to gain legitimacy. These key strategies reflect the resilience and cultural adaptability of IEs in SA. However, limited trust in formal institutions and systemic exclusion continue to hinder efforts to broaden their networks with local businesses and institutions. Thus, this context necessitates a more nuanced understanding of how IEs develop their networks as tools for growth, survival, and legitimacy.

GP was chosen for the study for two reasons. Firstly, previous studies on immigrant entrepreneurship were conducted in the province (Urban et al., 2024). Secondly, it has the highest entrepreneurial activity in SA (Chidau et al., 2022). Prior research indicates that there is no database of immigrant entrepreneurial businesses operating in SA (Tengeh and Nkem, 2017). As a result, the authors assumed that immigrant business ventures are included in the number of businesses operating across the different provinces in SA’s economy. We also noted, to the best of our knowledge, that there are no specific policies on IEs operating in GP. As such, business policies in the province apply to all businesses regardless of the owner’s origin.

The participants who took part in the study were from two continents, namely Africa (Cameroon, Congo, Malawi, Nigeria, Togo and Zimbabwe) and South America (Bolivia). The research participants had a diverse distribution in terms of age, gender, qualification, ethnic background, nationality, type of business and years in business. They had received some education, with a majority having a high school diploma or higher. They were involved in a wide range of business activities, including property management, real estate, information and communication technology (ICT), transport, construction, scrap recycling, clothing, welding, digital marketing, taverns, consulting, car dealerships, and photo studios. All of the participants in the study were males. The authors approached potential female IEs to participate in the study. Whilst some accepted the invitation but later changed their minds, others continued to postpone the date for the interview; thus, only males could be included in the study. Profiles of interview participants who took part in the study are presented in Table 1.

Purposeful sampling is the deliberate selection of samples that can provide sufficient information to answer the research questions (Sharma, 2017). As such, it was used for sample selection. We adopted a purposive sampling strategy because we believed that specific individuals (IEs) with different views, opinions and experiences could provide different insights on our topic of exploration (Campbell et al., 2020). A purposive sample is disadvantageous because research findings from purposive samples may not be generalised, and the researcher’s judgement may be susceptible to errors (Sharma, 2017). However, it is more cost and time-efficient compared to other sampling methods and therefore was ideal for this study. The unit of analysis in this study was immigrant business ventures, with IEs being the unit of observation.

Data for the study were collected over four months (June to September 2022) using semi-structured interviews. These allowed for flexibility, enabling interviewees to freely share their opinions, thoughts, experiences, and perceptions about the phenomenon being researched (Qu and Dumay, 2011). Data saturation was reached during the 15th interview where no additional information emerged. Moreover, saturation was evident by the 15th interview as themes had emerged across all participants, despite the sectorial variations. Despite the sample consisting only of male IEs, the study’s focus was not on gendered experiences, but rather on network development mechanisms. The inclusion of participants across different sectors, however, allowed for a broader investigation of the network development mechanisms and the recurrence of similar insights from participants across diverse sectors indicated that thematic saturation had been achieved.

Before applying for ethical clearance for the study, a pilot study was conducted. This was done to ensure that the interview questions were suitable, whilst also determining the actual time that could be taken to complete each interview (Doody and Doody, 2015). The ethical clearance for the study was approved in May 2022.

The data were collected through face-to-face interviews (21 participants) and online interviews (via the Google Meet platform–four participants). Interviews lasted between 30 and 60 min (an average of 44 m:30s). All interviews were recorded and transcribed verbatim. To ensure that there were no discrepancies between the transcripts and recordings, the recordings were listened to while reading the transcripts. During this stage, all minor errors were identified and corrected.

The data for the study were analysed thematically, which involves searching datasets for repeated patterns, and organising and reporting them (Clarke and Braun, 2017). Thematic analysis can be done inductively or deductively (Clarke and Braun, 2017). For this study, the authors used the inductive (data-driven) approach, where the identified themes and sub-themes were directly linked to the dataset. Moreover, the data-driven method moves from data to theoretical understanding, enabling the identification of similarities and differences in the data (Gioia et al., 2013). To analyse the data, the transcripts were perused multiple times to ensure familiarity with the dataset. The first step entailed open coding, where we analysed the data as it was, in participants' terms and language, without distilling or categorising the information. At this stage, (first-order) codes were generated from the data by reading the transcripts, and key chunks of data were coded (Clarke and Braun, 2017; Gioia et al., 2013). The second stage entailed drawing similarities and differences between the generated codes, thereby consolidating and combining similar codes to form sub-themes. The identified sub-themes were then grouped into two major themes/categories (Gioia et al., 2013). The themes were reviewed and refined to ensure that they were linked to the dataset and the dataset linked to the themes. The sub-themes and themes were further refined, ensuring that the right first-order codes, sub-themes, and themes were identified from the dataset (Clarke and Braun, 2017). Finally, the findings of the study were presented, consisting of the themes and sub-themes, supported by anonymised quotes from the research participants. The data structure is presented in Figure 1 (Section 5).

The first author who collected the data is an insider within the immigrant entrepreneurial community and was mindful of how positionality could facilitate access to data as well as influence the interpretation of data and findings. Thus, having a shared background with the participants helped the researcher build rapport with the participants and fostered an open conversation. To mitigate potential bias and ensure credibility, the researcher adopted a reflexive approach throughout the research process. Members checking was conducted by sharing some key interpretations with selected participants to confirm accuracy. Finally, an audit trail was maintained to document the methodological choice and decisions, the coding processes and development of themes, thus enhancing the transparency, rigour and trustworthiness of the study.

The purpose of this study was to explore the network development mechanisms used by IEs in an emerging economy context, namely, SA. The study identified two main themes, with four sub-themes each from the dataset. The themes and sub-themes are presented in this section with supportive quotes from interviewees.

Relationship-based mechanisms are those related to creating and nurturing personal links and ties. They regard interpersonal interactions and how they result in the establishment of long-term networks that can be leveraged for business operations in the host country. The relationship-based mechanisms are presented in this sub-section through four sub-themes.

Most participants stated that trust is a mechanism which they use to develop their networks, ties or relationships with other businesses and customers; this trust relationship is built with others over many years. Since IEs are operating in a hostile and unfriendly environment, they often lack resources and therefore depend on each other for such resources (Glinka et al., 2023). The exchange of resources can only happen if there is trust, and reciprocity of trust is a guiding factor in relationships. As a result, it is safe to say that building trust with others takes time; however, once it is done, it becomes a reliable relationship or network:

Most participants alluded to developing their networks through trust. Unfortunately, others described situations in which they thought they had developed a network through trust but felt no reciprocity. As a result, they were repeatedly disappointed by the other party in the trust relationship:

The experiences shared by P11 and P22 demonstrate that while networks can be developed through trust, it is also important to note that significant time and effort must be expended in doing so. Reciprocity should be the guiding principle in any network built on trust, to ensure that everyone (not just one party) benefits from the network.

Participants explained that they developed their networks by interacting and socialising with other individuals at formal and informal events. Furthermore, the development of networks at such events usually happens intentionally or unintentionally. As such, there is no specific formula, procedure or systematic approach to be followed in the development of networks. Furthermore, there is no specific location where networks can be developed. This can occur anywhere; for example, participants met and interacted at soccer clubs, restaurants, networking events and in Church:

From the above, entrepreneurs can meet like-minded people at events where they can “talk business” and exchange contacts. This paves the way for the development of a network. Thus, a network may not be developed immediately but the starting point will be interacting and socialising at events.

Some respondents indicated that they develop their networks by engaging with sub-communities. These could be sub-communities of people of the same nationality, people of the same ethnic background or alumni forums:

The findings of this study also showed that IEs develop their networks through transparent communication and mutual understanding. Open and clear communication between two people allows them to understand each other, which can lead to a long-term, mutually beneficial relationship. Participants expressed how clear they are when speaking with other businesspeople, thereby facilitating network development:

Other participants stated that they built their networks by introducing themselves to potential contacts. Therefore, while a network is not formed immediately, the introduction paves the way for network development. As a result, communication is once again highlighted as an important way to develop networks:

P11’s narrative is consistent with previous research. The literature asserts that networks can be formed by initiating contact with the person with whom you want to network (Kaandorp et al., 2020). Importantly, others may approach it differently.

Performance-based mechanisms are those that focus on measurable outcomes and results from past interactions with different individuals, organisations, groups or IEs. The performance-based mechanisms are presented in this sub-section through four sub-themes.

Some participants stated that they developed their networks, particularly with customers and clients, by providing quality service. The service they provided met the client’s exact needs, and as a result, the client kept giving them repeat business. Over time, this develops into a stable and dependable network:

From the above, providing excellent customer service is critical in any business and determines whether or not a customer will do repeat business. Customers are also regarded as important networks, and thus, good/quality service motivates them. Quality service, therefore, paves the way for the customer relationship to become a strong network.

Referrals also emerged as a way through which IEs developed their networks. As most of the participants stated, these referrals were either from family members, friends, clients or other business owners. For instance, a client could recommend a product or service to another prospect, who then becomes a network after repeat business. Some participants received referrals from people they did not even know. The following quotes are consistent with Kaandorp et al.'s (2020) observation, namely that entrepreneurs build their networks through referrals from people they met by chance:

Participants also added that they developed their networks through outsourcing and subcontracting. Outsourcing is a business practice in which a company hires a third party to perform a specific, agreed-upon task that was traditionally performed in-house.

Subcontracting occurs when a company hires a third party to complete specific tasks that cannot be completed internally. Both outsourcing and subcontracting are cost-cutting strategies used by firms. In this regard, one participant noted that:

As P4 explained, outsourced and subcontracted services eventually led to a strong business relationship or network. This is usually an agreement between two IEs (or firms) wherein one firm persists in outsourcing the service and another consistently delivers the service. This, therefore, evolves into a robust business relationship or network, as highlighted by P4. It is important to note that outsourcing is a two-way street, in which IE A outsources to IE B and IE B outsources to IE A. This implies that different entrepreneurs in the same line of business use outsourcing to establish their networks. Therefore, outsourcing in the case of this study is not one-sided. In this regard, another participant noted that:

An idea pitch is the presentation of a business idea to people, either formally or informally. Idea pitching is especially important because it allows those pitching ideas to find potential investors to take the idea forward. It also invites individuals who may be interested in becoming co-founders or teams to get involved in the idea. Thus, networks are developed as per the participants, through idea pitching, either at the family level or in formal pitching competitions:

The description given by P12 indicates that pitching ideas may help entrepreneurs deepen or strengthen the networks they already have. Aspiring entrepreneurs, on the other hand, may also use idea pitching or pitching events to meet potential network partners.

This study explored the network development mechanisms of IEs in SA. Findings from the IE interviews indicated that they develop their networks in the host country using both relationship- and performance-based mechanisms. The findings on relationship-based mechanisms are consistent with previous findings that IEs develop their networks through (1) trust (Kaandorp et al., 2020; Smith and Lohrke, 2008; Wang et al., 2019); (2) interaction and socialising (Desta, 2015; Ibarra and Hunter, 2007); (3) engagement in sub-communities (Stephens, 2013), and (4) transparent communication and mutual understanding. Networks that are based on trust are invaluable, since transaction costs can be reduced, thus enabling businesses involved to achieve sustainable competitive advantages (Wickham, 2006, 2017). When trust exists, individuals are more likely to freely exchange business ideas, which leads to improved business performance (Vissa, 2012).

SA’s strong informal economy (Charman et al., 2017) allows IEs to engage in trust-building through face-to-face interactions and other community relationships, which can serve as a substitute for formal regulatory systems. Given the shared struggles, IEs frequently develop bonds with people who have similar experiences. This fosters high levels of trust and cooperation within ethnic and personal networks. Moreover, a lack of formal support (see Muchineripi et al., 2019) motivates IEs to develop their unique system of trust, such as informal financial associations and saving groups, which can foster the development and growth of their networks. However, IE often encounter xenophobic attacks in contexts such as SA (Fubah and Moos, 2022). This can make it challenging for them to build trust-based relationships with local institutions and businesses. Moreover, their exclusion from formal business support reduces their confidence and trust in institutional fairness, reinforcing their reliance on informal networks where trust is earned, and not assumed.

Based on participants' explanations, we argue that trust is not (only) a relationship-based mechanism used in establishing networks but is a fundamental ingredient for all successful networking mechanisms. Therefore, trust enforces several network development mechanisms as presented in the conceptual framework on Figure 2. By using the relationship-based mechanisms to develop networks, IEs gain access to critical resources and insights into ideas and opportunities that may not be available through the performance-based mechanisms only.

Relationship-based mechanisms like trust, socialising and engagement in subcommunities are linked to bonding social capital that provides support, resources and a sense of solidarity in ethnic networks. These close ties are particularly vital in the contexts of institutional voids such as SA where formal support is often inaccessible particularly to IEs. On the other hand, other relationship-based mechanisms such as transparent communication can be associated with bridging social capital which may facilitate limited collaborations between IEs and individuals from other communities including locals. However, these bridging ties may remain fragile due to conflicts, social divides and lack of meaningful government intervention.

The conceptual framework presents network development mechanisms on a continuum across relationship-based and performance-based mechanisms. As the framework indicates, trust plays a central role across the mechanisms. In the relationship-based mechanisms, trust underpins the development and maintenance of close interpersonal ties or networks. These networks or ties rely on mutual understanding, confidence and shared norms. The performance mechanisms on the other hand also depend on trust since it influences whether individuals or businesses may be willing to share opportunities, collaborate and provide access to resources. Thus, trust is a key ingredient across the mechanisms, and it enables IEs to build and maintain networks in the absence of strong institutional support.

The findings on performance-based mechanisms are less prevalent in the literature on immigrant entrepreneurship. Additionally, we observed a limited use of these mechanisms by IEs in the GP. Specifically, performance-based mechanisms are based on historical performance, which informs and guides future interactions, business operations and decision-making. For instance, someone will be willing to refer another person to an IE’s service based on previous interactions, effectiveness and the IE’s performance. Referrals in this study originated from family members, friends, current and former business partners and customers. Idea pitching also emerged as a performance-based mechanism and is considered a critical way of identifying investors and other business owners to partner with (Sabaj et al., 2020). As our findings indicated, IEs in SA could identify a valuable business opportunity but lack the funding or capital to exploit the opportunity. Thus, they may decide to share the idea with another entrepreneur who has experience and sufficient capital and can take advantage of the identified business opportunity. If such an opportunity is beneficial, then the IE who pitched the idea shares the profit with the entrepreneur who avails the capital needed. This acts as a motivating factor wherein subsequent ideas can be pitched to the same person based on prior business dealings and performance. This paves the way for a reliable networking relationship. Moreover, research suggests that if the ideas pitched are good, novel and creative, then those with capital may positively assess and implement them (Lu et al., 2019; Samsami, 2023).

Quality service delivery also emerged as a performance-based network development mechanism used by IEs. Management literature suggests that quality service delivery facilitates and enhances repeat business (Ji et al., 2022; Parasuraman et al., 1988; Petrick and Sirakaya, 2004). Moreover, repeat customers are considered a stable source of revenue and a critical information channel for potential (new) customers. According to our findings, IEs offer a quality service to their clients, resulting in repeat business. This consequently leads not only to a service provider-client relationship but to a networking relationship between the quality service provider (the IE) and the client. Moreover, networks do not only exist between two businesses–they also exist between businesses and their clients.

This study also unravelled outsourcing and subcontracting as performance-based network development used by IEs in SA. Since IEs are operating in the host country, they do not have the full workforce, human capital or the capacity to take on different tasks as required by their clients. As a result, they may have to outsource some of their tasks to other service providers who have the capacity. They may also act as subcontractors themselves to other large companies, which consequently creates a reliable network. Therefore, past interactions and performance determine if there will be future interactions and operations among individuals. Moreover, past positive interactions and performance foster trust and reliability, reducing uncertainty and making it easier for firms to depend on one another for resources. This aligns with the SCT, which posits that networks can provide access to critical resources embedded within relationships with their members (Bourdieu, 1985; Nahapiet and Ghoshal, 1998). Therefore, IEs use different network development mechanisms, such as trust, referrals, quality service delivery and social interactions, to build and strengthen their networks. Through networks, they can access the social capital embedded within the networks to compensate for limited or a lack of formal institutional support. Thus, in the SA context, IEs use these mechanisms to develop networks that enable them to effectively navigate institutional voids by developing alternative support systems from which they can access resources for their business operations.

Performance-based mechanisms such as quality service delivery, referrals, subcontracting and idea pitching can be associated with both bridging and linking social capital. Providing a quality service and providing or obtaining referrals could enable IEs to transcend their immediate networks, thereby fostering bridging ties that can provide access to other communities, markets and even diverse customers. In addition, performance-based mechanisms such as idea pitching and subcontracting can also be linked to linking social capital. This is because it involves attempts to connect with formal institutions such as other registered businesses and entrepreneurial support organisations. However, the development of linking social capital remains a major issue in SA due to weak support and limited access to (government) resources by IEs.

Thus, while the three forms of social capital play a key role in helping IE address some of the institutional voids in SA, bonding social capital remains the most salient. Its dominance reflects the strength of close ties such as ethnic and co-ethnic networks, which provide vital support to IEs in the context of limited (and inaccessible) support. On the other hand, the presence of constraints brought by institutional voids limits the development of bridging social capital and linking social capital. In the absence of reliable government support and limited access to formal financing options, IEs are forced to rely on their close networks (bonding networks) to compensate for the institutional voids.

This study has some theoretical implications. Our paper contributes to the debate on entrepreneurial network development by unravelling performance-based network development mechanisms that have not previously been discussed in the literature on immigrant entrepreneurship. Previous research generally focuses on the role of networks for IEs (Fubah and Moos, 2025; Light et al., 2017; Wang and Altinay, 2012); types of networks (Glinka et al., 2023), and relationship-based network development mechanisms (Stephens, 2013). This study goes a step further to unravel performance-based mechanisms that are rooted in historical effectiveness and performance. These mechanisms inform and guide future interactions, business operations and decision-making, ultimately resulting in the development of reliable networks. We elaborate on these mechanisms, highlighting how they are used by IEs in SA in developing the networks that they use to operate their business ventures. Thus, we have contributed to the advancement of the literature on IEs and their entrepreneurial network development mechanisms/strategies.

Our study also contributes to the extant literature by extending the application of SCT. It illustrates how IEs rely on bonding social capital (trust-based relationships within closely connected ethnic communities) to navigate weak institutional support systems. Through shared experiences, informal financial associations, and savings groups, IEs build networks that act as substitutes for formal institutions. The study posits that exclusion of IEs from institutional support, combined with xenophobic attacks, limits their access to broader forms of social capital, thereby increasing their reliance on (informal) networks. By applying SCT, we highlight that network development is critical for IEs not only in accessing resources but also in managing dependencies and reducing uncertainties in contexts where institutional support is weak and fragmented.

Additionally, previous research indicates that the majority of literature on immigrant entrepreneurship is from the West, with little focus on emerging market contexts (Aliaga-Isla and Rialp, 2013; Dabić et al., 2020). This study, therefore, provides invaluable contextual insights on immigrant entrepreneurship and network development, contributing to the limited empirical evidence on the topic in emerging economies such as SA. Finally, this study adds to the growing body of literature on the intersection of immigrant entrepreneurship and entrepreneurial network development.

This research also has some practical and managerial implications. IEs in SA often encounter different institutional configurations and uncertainties, as well as a lack of access to resources due to their liabilities of outsidership and newness. As such, we encourage IEs in SA to utilise the network development mechanisms we have unravelled in this study, to establish reliable networks which can be leveraged for resources for their ventures. Specifically, IEs in SA should consider developing various network types (ethnic, social, business, managerial and even professional networks), as these can provide access to multiple resources. These networks, for instance, social and ethnic networks, could provide informal loans which can be used to compensate for limited access to formal financing options for the IE’s business. IEs can also strengthen their networks by using these mechanisms to develop transnational networks, which can be used to compensate for weak institutional support in the absence of local networks. We also encourage IEs in SA not to limit themselves to relationship-based network development mechanisms. They should use performance mechanisms as well, since this would provide access to a diverse pool of resources.

As the study indicates, when IEs in SA develop networks, they have access to critical resources through exchange relationships in the developed networks. As a result, policymakers and practitioners in these resource-constrained environments (such as SA, which is characterised by institutional voids) could encourage the development of networks between entrepreneurs, including immigrants (and other stakeholders). These networks can help entrepreneurs source critical resources for their businesses. This can be achieved by organising business events that bring entrepreneurs together. Such events could serve as forums and platforms where IE can engage with local entrepreneurs, thus facilitating the establishment of business relationships or networks. Moreover, local agencies in SA such as Small Enterprise Finance Agency and Township Business Forums could also facilitate cross-ethnic networking. Also, the Chambers of Commerce can link IEs to local supply chains by acting as an intermediary and a resource provider.

Furthermore, the SA Government could support and provide training programs to locals and IEs on how to practically develop their networks by focusing on the myriad of ways (relationship- and performance-based mechanisms) identified in this study.

The study also had some limitations. As the findings of this study are based on self-reporting by IEs, they may contain exaggerations that do not accurately reflect their lived experiences. Future studies may also examine how different institutional contexts affect network development mechanisms and strategies. This is particularly important because institutional contexts and environments shape how opportunities and constraints influence why and how entrepreneurs develop and maintain their networks. Furthermore, exploratory studies such as this one have a small sample size, which limits replicability. Additionally, these findings are limited to the context of the study and cannot be generalised or transferred. Given that the participants in the study were exclusively male, future research could focus on female IEs to explore how gender influences network development mechanisms in emerging markets. It would also be interesting to see studies that investigate which of the network development mechanisms are used at the different stages of the business life cycle. Furthermore, this study looked at IEs’ network development mechanisms. Longitudinal studies could undertake their network development process to unravel the different steps and stages involved alongside how the mechanisms evolve. Furthermore, future research could compare IEs from different countries operating in the host country’s network development mechanisms to identify convergent or divergent patterns. We believe this would provide critical insights to advance network development literature further. Despite its limitations, this paper hopes to serve as a starting point for discussions on how IEs can develop the networks that they can use in their entrepreneurial endeavours in emerging economies.

This paper is part of a large data collection that has resulted in multiple other papers.