Stagnation or growth of Roadside Businesses: A Case Study of Emerging Economies

Abstract

Roadside businesses are common in emerging economies. They provide jobs and basic goods to local communities.  Despite this role, many fail to grow beyond subsistence level.  This study aimed to explain why roadside businesses remain stagnant by exploring the structural, social, and individual factors shaping their growth in emerging economies.  The study adopted a qualitative research design.  It was conducted in three trading areas in Mbale City: Nkoma Stage, Kikindu, and Kiteso.  Data was collected from 43 interviews.  Saturation was reached at 27^th interview. Data were analysed using a grounded theory approach. The findings show that growth and stagnation factors cluster into four broad themes. First are economic and operational constraints, including access to finance, transaction costs, daily cash flow challenges, and weak business operations.  Second are social and household influences, such as family obligations, social expectations, and cultural norms.  Third are market-related conditions, including competition, market awareness, customer demand, and the ability to adapt to changing markets.  Fourth are institutional and environmental factors, which include government policies, regulatory support, physical trading environments, and exposure to weather risks.  At the individual level, personal attributes also matter.  These include discipline, financial literacy, risk attitude, and entrepreneurial motivation.  The study makes a theoretical contribution. It extends entrepreneurship theory and the theory of the firm by proposing an Adaptive Embeddedness Model (AEM).  The model explains how small businesses are shaped by constant interaction between the owner, the household, the market, and the institutional environment.  The study concludes that roadside businesses are vital to emerging economies. However, survival alone is not enough.  Sustained growth requires coordinated government support. This includes training in financial management, character development, access to finance, and provision of safe trading spaces.