Original Research

The importance of tolerance for failure and risk-taking among insurance firms in hyperinflationary Zimbabwe

Oliver Kapepa, Jurie van Vuuren
The Southern African Journal of Entrepreneurship and Small Business Management | Vol 11, No 1 | a142 | DOI: https://doi.org/10.4102/sajesbm.v11i1.142 | © 2019 Oliver Kapepa, Jurie van Vuuren | This work is licensed under Other
Submitted: 14 June 2017 | Published: 16 April 2019

About the author(s)

Oliver Kapepa, Department of Entrepreneurship, University of Pretoria, Pretoria, South Africa
Jurie van Vuuren, Department of Entrepreneurship, University of Pretoria, Pretoria, South Africa


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Abstract

Background: At the dawn of the 21st century, Zimbabwe started moving towards dangerous levels of the infamous hyperinflation trajectory that made management of businesses a nightmare. Many businesses failed.

Aim: This study seeks to explore if entrepreneurship, and in particular the aspects of risk-taking and tolerance of failure, could have saved the few companies that survived the menace that ravaged the insurance industries among many other sectors of the economy.

Setting: The study looks at this particular entrepreneurial behaviour of risk-taking among insurance companies in Zimbabwe during the hyperinflationary environment that ravaged and defied economic logic and fundamentals. Savings were being eroded at a pace faster than anywhere in the world ever before, taking a toll on businesses as they struggled to survive.

Methods: Using a survey sample of insurance companies in Zimbabwe, a quantitative approach was adopted. Questionnaires were used to extract data from participants to establish the nature and extent of risk-taking, and in particular tolerance for failure during this period. Therefore, tolerance of failure in corporate entities is discussed in this article as a critical aspect of risk-taking that enhances entrepreneurial innovation and ultimate prospects of corporate prosperity among insurance companies. A measure is developed to gauge the extent of tolerance of failure from the perspective of employees in the insurance industry in Zimbabwe.

Results: The benefit of tolerance of failure or the lack thereof was measured on the dimension of profitability and growth. Results revealed that tolerance of failure is a necessary entrepreneurial virtue that encourages knowledge acquisition by both experimental and experiential learning – a risk element that also spurs entrepreneurial innovation and ultimately encourages both profitability and growth of the business entity, if well managed.

Conclusion: The study concluded that firms that tolerate failure are more likely to be entrepreneurially innovative and perform better than those that are risk-averse and do not tolerate failure.


Keywords

Entrepreneurship; risk taking; tolarance of failure; insurance firms; entrepreneurial performance; Zimbabwe.

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