1.1 Definitions of Entrepreneur and Entrepreneurship
The medieval French term ‘entreprendre’ referred simply to people who ‘get things done’, or who ‘undertake or take in one’s own hands’. By the early 18th Century, the term had evolved to refer to local business contractors. In the pre-industrial period, some strong elements of entrepreneurial action and reward were incorporated in most of the work-related activities. Most of the work force was made up of entrepreneurial farmers, prospectors, explorers, shippers, traders, craft workers and merchants (Emami & Nazari, 2012). Even work not usually associated with modern entrepreneurship, such as wild west law enforcement, medieval tax collecting, renaissance trade apprenticing, pirating and post-slavery share-cropping involved opportunistic self-initiative with profit motives and some forms of risk assumption (Galbraith & Galbraith, 2007).
After the industrial revolution, these entrepreneurial incentives in normal work life were replaced with formal jobs in bigger organisations. The commoditisation of labour was later institutionalised into the welfare-based, unionised, semi-socialist economies as seen in most of the modern developed economies of today. This process of social economics creates an incentive for free-thinking individuals with a strong work morality to form their own businesses (Galbraith & Galbraith, 2007).
Traditional academic attempts to define and explain entrepreneurs and entrepreneurship as a phenomenon have been based on functional arguments depending on how two related questions are answered. Firstly, what unique function does the entrepreneur play in the economy and, secondly, what unique characteristics of individuals enable them to perform and function as entrepreneurs (Emami & Nazari, 2012)?
However, entrepreneurship remains a multi-faceted phenomenon, spanning many disciplinary boundaries and, thus, many perspectives, methodologies and units of analysis, resulting in a diversity of definitions, including some of the following listed in Table 2.1 below.
|Article and Reference||Entrepreneurship Definition|
|The Theory of Economic Development (Schumpeter, 1934).
Robert Allen’s biography of Joseph A. Schumpeter (Allen & Moss, 1993)
|Schumpeter distinguishes between two groups of entrepreneurs. Firstly, as innovators, the individuals who upset and disorganise the existing way of doing things, who come up with ideas and embody those ideas in high-growth companies;
Secondly, as entrepreneurs (and the focus of this study), who set up small businesses, much like other small businesses, as self-employed, small-business owners, who establish and manage a business for the principal purpose of furthering their personal goals. In this view, the business is usually the primary source of income and will consume the majority of the entrepreneur’s time and resources.
|The Achieving Society (McClelland, 1961)||McClelland defines the entrepreneur as someone who exercises some control over the means of production and produces more than he/she can consume in order to sell or exchange it for individual income.
In practice such people are traders, independent artisans and small business venture operators.
|Characteristics of Successful Entrepreneurs. (Hornaday & Aboud, 1970)||Hornaday and Aboud define the entrepreneur as an individual who starts a business where there was none before; the business has at least eight employees and has been established for at least five years.|
|Factors Influencing the Rate of Formation of Technical Companies (Draheim, 1972)
|Draheim defines entrepreneurship as the act of founding a new company where none existed before and the entrepreneur is the person who, as the founder, has a significant ownership stake in the business.
In this view, Entrepreneurs are not only employees in the organisation but their intention is for the business to grow and prosper beyond the self-employment stage.
|Who are the Entrepreneurs? (Liles, 1974)
|Liles suggests that an entrepreneur is a special type of individual, an unusual and uncommon man, in most respects very much like many other ambitious, striving individuals|
|Risk Taking Propensity of Entrepreneurs (Brockhaus, 1980)||Brockhaus defines an entrepreneur as a major owner and manager of a business venture not employed elsewhere.|
|“Who is an Entrepreneur?” Is the wrong question (Gartner, 1989)||Gartner defines an entrepreneur as a major owner and manager of a business venture not employed elsewhere.
Gartner’s view distinguishes between entrepreneurs, as goal- and action-oriented individuals, and managers as those who carry out policies and procedures to achieve set company goals.
|The Roman God Mercury: An Entrepreneurial Archetype (Bird, 1992)||Bird views entrepreneurs as mercurial individuals that are prone to insights, brainstorms, deceptions, ingenuousness and resourcefulness.
These Entrepreneurs are cunning, opportunistic, creative, and unsentimental.
|Entrepreneurship and Innovation (Drucker, 1985)
The Theory of the Business (Drucker, 1994)
|Drucker views the entrepreneur as a person who always searchers for change, one who responds to it, and exploits it as an opportunity.
In Drucker’s view, innovation is the specific tool of entrepreneurship; the means by which entrepreneurs exploit change as an opportunity for a new business or service.
|Strategic Management of Family Businesses: Past Research and Future Challenges (Sharma, Chrisman, & Chua, 1997)||Sharma, Chrisman and Chua suggest that entrepreneurship encompasses the acts of organisational creation, renewal or innovation that occurs within or outside an existing organisation.|
|Entrepreneurship and Small Business – A Pacific Rim Perspective (Schaper & Volery, 2004)||Schaper and Volery define entrepreneurship as the process, brought about by individuals, of identifying new opportunities and converting them into marketable products or services|
|Effective Small Business Management. An Entrepreneurial Approach (Wilson, Zimmer, & Scarbourough, 2009).
|Scarborough, Wilson and Zimmer define the entrepreneur as an individual who creates a new business in the face of risk and uncertainty for the purpose of realising profit and growth by identifying opportunities and assembling the necessary resources to capitalise on these opportunities.|
|Entrepreneurship and Small Firms (Deakins & Freel, 2012)||Deakins and Freel suggest that entrepreneurship refers to the creation of a new economic entity centred on a novel product or service or, at the very least, one which differs significantly from products or services offered elsewhere in the market.|
|New Venture Creation. Entrepreneurship for the 21st Century (Adams & Spinelli, 2012)||Adams and Spinelli define entrepreneurship as a way of thinking, reasoning, and acting that is obsessed with opportunity, holistic in approach, and is leadership balanced.
Typically, entrepreneurs devise ingenious strategies to marshal limited resources. The creation, recognition and initiative to seize business opportunities are at the heart of the entrepreneurial process.
Entrepreneurship requires a willingness to take both personal and financial risks, but in a calculated manner, in order to shift the odds of success constantly, balancing the risk with the potential reward in the creation and realisation of value, not just for owners, but for all stakeholders
The list of definitions for entrepreneurs and entrepreneurship in Table 2.1 is by no means complete but represents some of the most relevant to this study. This study is focused on the role played by Christian entrepreneurs in new and small businesses in RSA. This research attempts to facilitate understanding of the relationship between Christian Faith, entrepreneurial activity and economic growth in RSA. The theoretical model seeks to identify factors of Christian Faith which encourage and/or hinder entrepreneurial activity and to guide the formulation of effective and targeted policies aimed at stimulating entrepreneurship in RSA. For this research thesis, the GEM definition of entrepreneurship as ‘any attempt at new business or new venture creation, such as self-employment, a new business organisation, or the expansion of an existing business, by an individual, a team of individuals, or an established businesses’ (Bosma, Wennekers, Guerrero, Amorós, & Singer, 2013) is thought to be the most appropriate.
From an economic perspective, the most interest in entrepreneurs and entrepreneurship, as a phenomenon, rests in the perceived contributions entrepreneurs make to economic growth, increased productivity, job creation, technological innovation, deregulation, privatisation and structural adjustments or re-alignments in the areas in which these individuals operate (Bosma, Wennekers, Guerrero, Amorós, & Singer, 2013).
Although the effects of entrepreneurship are rarely contested, a common observation about the field of entrepreneurship research is that it lacks consensus about the object of study (Emami & Nazari, 2012). When referring to an entrepreneur, researchers are interested in an individual’s particular behaviour, attributes and skills. When referring to entrepreneurship, researchers refer to a process which involves specific outcomes relating to the innovation and the introduction of new economic activity.
However, in the existing literature, the two, related concepts of entrepreneurs and entrepreneurship are often used inter-changeably (Radipere, 2012), which appears to support the argument that there is no single, generic definition of an entrepreneur or of entrepreneurship (Deakins & Freel, 2012; Adams & Spinelli, 2012). Additionally, most of the attempts to distinguish between an entrepreneur and a small-business owner have discovered no, significant, differentiating factors except that what differentiates entrepreneurs from non-entrepreneurs is that entrepreneurs create organisations while non-entrepreneurs do not (Gartner, 1989).
This overview of the literature on entrepreneurship is based on the three views of the entrepreneur and entrepreneurship described by Deakins and Freel (2012). These three views provide a solid basis for further understanding of the entrepreneur and this attempt to identify the organisational and social variables that will ensure the sustainability of well-governed, Christian, entrepreneurial communities in RSA as the stated outcome of this research.
Firstly, the functional approach of economic writers provides a conceptual view of entrepreneurship and the role of the entrepreneur in economic development. Secondly, the psychological traits approach to understanding entrepreneurs provides the essential attributes of the entrepreneurial personality and, thirdly, the socio-behavioural approach recognises the importance of social and cultural factors in entrepreneurship and entrepreneurial behaviour (Deakins & Freel, 2012).
Because entrepreneurs, in many ways, personify market forces and most entrepreneurial ventures involve a business venture, entrepreneurship should be a core element of the economics of organisations (Klein & Cook, 2006). The functional approach of the historical economic writers, as summarised in Table 2.2 below, provides a conceptual view of the role the entrepreneur plays in the economy and in economic development. The entrepreneur is seen as an organiser of the factors of production and a catalyst for economic change. The key ability of the entrepreneur is creative alertness or the ability to spot opportunity; an innovator acting as the ‘hero’ figure in the organisation. Additionally the entrepreneur is perceived as the risk-taker with profit being the reward for the risk-taking.
|Article and Reference||Entrepreneurship Definition|
|Was Richard Cantillon an Austrian Economist? (Hebert, 1985).
Entrepreneurship, Religion and Business Ethics (Emami & Nazari, 2012).
Richard Cantillon – The Father of Economics (Nevin, 2013).
Entrepreneurship and Small Firms (Deakins & Freel, 2012).
|Richard Cantillon was originally a businessman who turned into a reflective writer of economic treatises and is credited with first imbuing the term ‘entrepreneur’ with a new and more significant meaning.
In 1755, Cantillon used the term ‘entrepreneur’ to identify individuals within an economic system who accepted risk for profit rather than being dependent on a regular salary or income.
Entrepreneurs were thereafter identified as the driving force behind the seemingly perpetual motion of the economy’s circular flow of money and goods.
Cantillon’s view portrays the entrepreneur as the undertaker of great business adventures, purchasing materials at a given price to produce/add value and sell at an uncertain price in the pursuit of profit.
Cantillon considers the entrepreneur to be the engine of the nation’s economy where the successful will profit and prosper, while the unsuccessful will go bankrupt when facing the risk of uncertain returns brought about by unpredictable changes in consumer demand and/or competition.
|The Theory of Economic Development (Schumpeter, 1934).
Entrepreneurship, Religion and Business Ethics (Emami & Nazari, 2012).
|Considered by many to be the grandfather of contemporary entrepreneurship theory, Joseph Schumpeter positioned the entrepreneur as the causal agent responsible for creating and managing disequilibrium in the economy.
Schumpeter opposed the idea that the entrepreneur is a risk-taker; instead, he said that entrepreneurship is the act of carrying out new combinations of existing productive resources.
Thus, Schumpeter views the act of innovation as the defining characteristic of an entrepreneur.
|Jean-Baptiste Say as a Benthamite Utilitarian (Schoorl, 2002; Say, 1803).
Entrepreneurship, Religion and Business Ethics (Emami & Nazari, 2012).
|Say’s approach emphasises the role of the entrepreneur as the pivot and catalyst for economic change and development.
Say said that the study of economics should not start with abstract mathematical and statistical analyses, but with the real experience of the human being.
In Say’s view, the entrepreneur is the master agent who provides a commercial stage on which to take the calculated risk of bringing the different factors of production, land, capital and labour together to meet human needs and wants for the purpose of wealth creation.
|Risk, Uncertainty and Profit. (Knight, 1964)||Knight makes the distinction between uncertainty that is measurable, which he termed ‘risk’, and uncertainty that is not measurable, which he termed ‘true uncertainty’.
Risk, Knight contends, can simply be insured. Knight associates entrepreneurship with ‘true uncertainty’, particularly when it involves new products and services for which a market does not already exist.
In this view, the entrepreneur is someone who is prepared to take risk, willing to accept ‘true uncertainty’, which cannot be insured, with the necessary confidence and skill for which the reward is profit.
|Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach (Kirzner, 1997).||To Kirzner, the entrepreneur is someone who is alert to the information gaps in the market, recognising possibilities, acting as a facilitator for trade between suppliers and clients, thereby taking advantage of opportunities to trade.
Kirzner argues that the driving force of the market process is provided neither by the consumers nor the owners of the means of production but by the speculating of the entrepreneur;
In Kirzner’s view, the profit-seeking speculation, driven by an entrepreneur, is the major driving force of the market and of production.
|G. L. S. Shackle (1903-1992): A Life with Uncertainty (Ford, 1993)
The Theory of the Business (Drucker, 1994)
Entrepreneurship and Small Firms (Deakins & Freel, 2012)
|Shackle’s entrepreneur is someone who is creative, original and imaginative.
In Shackle’s view uncertainty gives rise to imagination and imagination is important for identifying potential opportunities.
Entrepreneurs investigate potential opportunity and assess what available resources can possibly lead to the creation of new products or services.
The extent to which these Entrepreneurs are prepared to be creative, to recognise and exploit opportunities will often be determined by a combination of their personal background, education and attitudes.
To conclude, the economic writers highlight the risk-bearing and uncertainty-reducing role of entrepreneurs. The economic writers see the entrepreneur as an innovator with the knowledge and insight to see new possibilities. The entrepreneur is a co-ordinator of resources and facilities in the economy, while dealing with conditions of uncertainty and change (Deakins & Freel, 2012; Knight, 1964; Henrekson & Sanandaji, 2013; Kirzner, 1997; Emami & Nazari, 2012; Ford, 1993).
The character or personality of an entrepreneur is often the single most influential factor in the performance and competitiveness of Small, Micro and Medium Enterprises (SMME) (Gurol & Atsan, 2006). Various authors (Gurol & Atsan, 2006; Deakins & Freel, 2012; Rwigema & Venter, 2004; Timmons & Spinelli, 2009) have examined the personality of entrepreneurs to find some common behavioural traits often not found in non-entrepreneurs and business managers. While it is unlikely that some individuals have an ‘entrepreneurship gene’, in this approach, entrepreneurs are assumed to have a particular personality type that enables them to function and be more successful in an entrepreneurial environment (Deakins & Freel, 2012).
The early work of McClelland (1955) focuses on the individual’s high need for achievement and/or his/her desire to excel. His research led him to believe that the need for achievement is a distinctly human motivation that can be distinguished from other needs and that the motivation of achievement can be isolated and assessed in any group of individuals. McClelland’s theory of psychological motivation (1987) states that people are motivated by three principal needs.
Firstly, McClelland (1987) illustrated some of these characteristics by describing a laboratory experiment. The participants were asked to throw some rings over a peg, from any distance they chose. Most participants tended to throw either from a very close range or from too far. The individuals with a high need for achievement seemed to measure the distance where they would get the greatest sense of mastery and personal challenge. McClelland (1987) concluded that achievement-motivated people are not gamblers but that they take the middle ground and feel that their efforts and abilities will influence the outcome of the issue at hand (McClelland, 1987). The achievement-motivated people typically set difficult but potentially achievable goals for themselves and they prefer to work on a problem by minimising risk rather than leaving the outcome to chance, while most other people tend to be extreme, favouring either gambling or minimising their exposure to risk. Thus, in McClelland’s view (1987), people with a high need for achievement tend to seek situations in which they obtain measurable feedback on their achievements. These achievement-motivated individuals are often found in sales jobs or as owners of their own businesses, where feedback is measurable. Additionally, achievement-motivated people are more concerned with personal achievement, like solving complicated problems, than with the rewards of success like money or praise. Achievement-motivated people are likely to come from families in which parents expect their children to start showing some independence between the ages of six and eight, making choices and learning to perform tasks without assistance. At this age, they typically know their way around the neighbourhood and know how to take care of themselves around the house already (Calitz, Cullen, & Boshoff, 2013; Cook & Hunsaker, 2001).
Secondly, McClelland (1955) identified the need for power as an urge to influence others and make them do things which they would not have done if left to themselves. Individuals with a low need for power lack the assertiveness and self confidence necessary to organise and direct group activities effectively. McClelland (1987) identified four stages of power orientation as shown in Table 2.3 below.
|First level||Individuals draw inner strength from others by being a loyal follower and serving the power of other leaders.|
|Second Level||Individuals draw strength by playing power games. At this level individuals start collecting symbols of status, practicing one-upmanship, and trying to dominate situations.|
|Third level||Individuals become more self-assertive, becoming more aggressive and trying to manipulate situations so as to achieve their own targets and agendas.|
|Fourth level||Individuals start acting as an instrument of higher authority by identifying with an authority system and being able to claim formal legitimacy.
These socialised power leaders direct their power in socially positive ways that benefit others rather than contributing to their status and gain.
These power leaders are hesitant to use power in a manipulative manner, are less narcissistic and defensive, accumulate fewer symbols of power or status, have a longer range perspective, and are more willing to receive counsel and advice.
They realise that power must be distributed and shared, and that everyone must have a sense of influence over their own jobs.
Souce: (McClelland, 1955; McClelland, 1987)
Thirdly, McClelland (1961) identified the need for affiliation. The need for affiliation reflects behaviour towards others that is co-operative, supportive, and friendly. This group of individuals get satisfaction from being liked and accepted by others. They prefer to work with others who prefer group harmony and cohesion and are usually reluctant to let work interfere with group harmony and relationships. McClelland (1987) suggests that a strong need for affiliation undermines a leader’s objectivity and that this affects his/her decision-making capability.
Leaders with a low need for affiliation tend to be loners who are uncomfortable socialising except with a few close friends or family. They lack motivation to build and maintain social contacts, public relations and building close personal relations with peers and subordinates. They tend to display a consistently determined work ethic and commitment to the organisation, but they might not possess flexibility and people-centred skills. Thus, McClelland (1987) argues that people with strong achievement motivation make the best leaders and entrepreneurs, although they can have a tendency to demand too much of their staff in the belief that they are all similarly focused and results driven.
It is difficult to separate academically a set of characteristics for successful entrepreneurs from those associated with successful managers or individuals, because many of these characteristics are often similar, but Adams and Spinelli (2012) attempt to categorise the entrepreneurial character traits that can be acquired and those that are more innate and, perhaps, distinguish ‘born entrepreneurs’ from ‘made entrepreneurs’ as shown in Table 2.4 below.
|The need for achievement.||High energy coupled with emotional stability.|
|Internal locus of control.||Creative and innovative ability.|
|Leadership abilities and competencies such as the ability to take responsibility for actions/decisions.||Conceptual ability;|
|Visionary and the capacity to inspire.|
Source: (Adams & Spinelli, 2012)
Adams and Spinelli (2012) suggest that these acquired skills can be taught or. at the very least. scenarios can be provided to stimulate the acquisition of these skills. Although Adams and Spinelli (2012) claim that some characteristics are more innate to entrepreneurs, it remains difficult to justify that these abilities characterise this group only and not other successful individuals as well, and also it does not mean that some of these innate abilities cannot ever be acquired in a learning environment, using planning scenarios and problem-solving tools to demonstrate how opportunities can be exploited, how resources can be acquired and how creative solutions can be developed.
Timmons and Spinelli (2009) also grouped and defined the entrepreneurial attributes under three headings. These are shown in Table 2.5 below and define the core and desirable entrepreneurial attributes. The table includes a list of non-entrepreneurial attributes, which, however, are often associated with entrepreneurs.
|Core Entrepreneurial Attributes||Desirable Entrepreneurial Attributes||Non-Entrepreneurial Attributes|
|Commitment and Determination||Capacity to Inspire||Outer Control|
|Leadership Qualities||Values, Morals and Ethics||Invulnerability|
|Opportunity Obsession||Intelligence, Emotional Intelligence||Knows it all|
|High Tolerance of Risk, Ambiguity, and Uncertainty||Energy, Health and Emotional stability||Counter/dependency|
|Creativity, Self-reliance and Adaptability||Innovativeness||Macho|
|Motivation to Excel||Perfectionist|
Source: (Timmons & Spinelli, 2009)
A more detailed description of each of the core and desirable attributes of entrepreneurs follows.
- Commitment and determination: At the heart of the entrepreneurial process is the opportunity seeker and the guardian of the business’s vision. Successful entrepreneurs have a high adversity quotient and the ability to recover from setbacks. These entrepreneurs are disciplined and persistent, they commit and recommit quickly and have the ability to confront and overcome insurmountable obstacles in an ever-changing business environment (Badal, 2014). Additionally, a new business often takes priority in terms of the entrepreneur’s time, capital, patience, loyalty, tenacity and determination to ensure that obstacles are overcome and a new business’s weaknesses are addressed (Timmons & Spinelli, 2009).
- Leadership qualities: Entrepreneurs are the renegades, rebels, world changers, innovators, black sheep, risk takers and workaholics. These are just a few of the names they are called. Typically, successful entrepreneurial leaders have a high degree of emotional intelligence (EQ), the capacity to be aware of, control and express their emotions, and the ability to handle interpersonal relationships fairly and empathetically(Howes, 2014). Successful entrepreneurs possess the capacity to influence others and they are always building relationships with the different stakeholders of an organisation. Successful entrepreneurs are often nurturing, not interpersonally competitive and tend to treat others as they, themselves, want to be Entrepreneurs often become interdependent when building teams and usually share with those who contribute to their success. Most often, successful entrepreneurs are experienced and skilled in the market in which they want to compete and have sound general management skills and a strong internal locus of control (Timmons & Spinelli, 2009; Henton, Melville, & Walesh, 1997).
- Opportunity obsession: The sort of single-mindedness, even when presented as madness by others, has propelled many successful entrepreneurs to dive into their business ventures whole-heartedly, to sacrifice everything for an opportunity, to ensure, more often than not, success in the end(Choi, 2009). Successful entrepreneurs are often not inventors, but are creative and obsessed with the new opportunities, constantly developing new ideas, watching trends, shaping unique enterprises and relying on their own experiences to generate and shape ideas into viable opportunities (Wilson, Zimmer, & Scarbourough, 2009; Timmons & Spinelli, 2009; Alstete, 2008).
- High tolerance of risk, ambiguity, and uncertainty: It is an entrepreneurial ability to create a compelling vision, convince a team and then to charge ahead that creates order out of chaos in an entrepreneurial environment. However, it also requires the willingness to be open to new data and information and to make mid-course corrections that mitigate risk. The ability to do both of these at once while in an environment of great uncertainty depends on the level of tolerance of ambiguity that sets an entrepreneur apart from the rest. Individuals with a high tolerance of ambiguity tend to approach problems from unsuspected angles, finding less consensually expected solutions (Barringer & Ireland, 2008; Sandefer, 2012). Often, however, entrepreneurs are seen as abrasive, ingenuous, unsound and impractical, especially when they act as catalysts in settled groups. They certainly do provide the dynamics needed to bring about change, without which organisations tend to stagnate and become obsolete(Timmons & Spinelli, 2009).
- Creativity, self-reliance, and adaptability: Most breakthrough discoveries occur when two or more different disciplines collide. Creativity collisions, at this point of intersect, are to be encouraged, because they allow the entrepreneur to view problems from different perspectives. Thus, creative problem-solvers are often able to connect two distinct areas of expertise and can translate potential solutions from one field to an unrelated area(Fallon, 2014; Smith & Chimucheka, 2014). Some entrepreneurs attribute their creativity to divine inspiration or at least some mysterious process of intuition not amenable to analysis or understanding (Solomon M. , 2009). Self-reliance was originally defined as ‘the attitude of being self-employed, whether inside or outside an organisation’ and was later modified to ‘the ability to actively manage one’s work life and learning in a rapidly changing environment’ (Longenecker, Moore, Petty, & Palich, 2006). Additionally, most entrepreneurs are adaptable and will be those who can accommodate the changing needs of their environment the best, while keeping a clear sense of self actualisation and their life’s direction (Timmons & Spinelli, 2009).
- Motivation to excel: Successful entrepreneurs are driven mostly by the desire to compete against their own self-imposed standards. Entrepreneurs are goal and result oriented, driving themselves to achieve and grow but they tend to have a low need for status and power, and are interpersonally supportive versus competitive in their relations with others. In the business, entrepreneurs insist on high standards of integrity, reliability and ethics and successful relationships. Entrepreneurs are aware of their strengths and weaknesses and they focus their energy on the challenges of building new enterprises(Timmons & Spinelli, 2009; Smith & Chimucheka, 2014).
- Capacity to inspire: Entrepreneurs tend to be inspirational leaders with a strong ability to identify obstacles and find solutions to problems. Entrepreneurs recognise the importance of committed staff and are capable of infecting their teams with their enthusiasm. Successful entrepreneurs inspire, putting ideas, dreams, hopes and vision in as many people as they can with a simple message of inspiration, collaboration and passion (Deakins & Freel, 2012; Smith & Chimucheka, 2014).
- Values, morals and ethics: The entrepreneur’s most valuable possession is not money or products but his/her reputation (Tomczyk, Lee, & Winslow, 2013). Values have a central position in the configuration of the entrepreneur’s personality and determine the individual’s attitudes, which, in turn, shape behaviour, decision-making processes, judgment and personal preferences (Diaz & Rodriguez, 2003; Tomczyk, Lee, & Winslow, 2013).
- Intelligence: Successful entrepreneurs succeed because they identify and capitalise on their own strengths, and understand and compensate for their weaknesses(Zakarevičius & Župerka, 2010). Successful entrepreneurship requires a strategic merger of analytical, creative and practical aspects of the intelligences (Pavia, 2013). Entrepreneurs need creative intelligence to come up with new ideas, analytical intelligence to evaluate whether ideas are good, and practical intelligence to figure out a way to market and sell the ideas. Additionally, successful entrepreneurs must be emotionally intelligent, because emotionally intelligent entrepreneurs can comprehend complex situations, working on multiple ideas and problems simultaneously, including strategic planning and decision making (Pavia, 2013).
- Energy, health and emotional stability: Entrepreneurs are rarely sick, often physically resilient and are aware of the importance of remaining in good health (Balog, Baker, & Walker, 2014). Successful entrepreneurs are comfortable in stressful situations and are challenged rather than discouraged by setbacks or failures (Deakins & Freel, 2003). Most entrepreneurs have the capacity to work for long hours with less than the normal amount of rest or sleep. Through persistent hard work and an intense desire to complete a task, solve a problem or overcome hurdles, entrepreneurs are mostly able to achieve the never-ending goal of excellence(Kumar, 2012).
- Creativity and Innovativeness: Brown and Ulijn (2004) suggest that creativity and innovation are often sparked by experimenting with new ideas. An entrepreneur analyses problems and situations in order to create opportunities, introducing new products, developing new methods of production, discovering new markets and re-organising struggling enterprises through innovative ideas and creative thinking(Kumar, 2012). Entrepreneurs often see problems and hence opportunities through the eyes of the potential users, creatively experimenting with possible solutions, thinking more in the abstract, evaluating information critically, questioning assumptions and the current ways of doing things with new and innovative solutions in mind (Adams & Spinelli, 2012; Timmons & Spinelli, 2009).
In broad terms the social behavioural approach to entrepreneurs and entrepreneurship takes into account both the social system and the culture of the group of people involved. The social-cultural environment, in relation to entrepreneurship, can be defined as all the elements of the social system and culture of a people which positively or negatively affect and influence the emergence of entrepreneurial behaviour and performance, and entrepreneurship development in general (Deakins & Freel, 2012; Hofstede, Hofstede, & Minkov, 2010). This approach views entrepreneurship as an aspect of cultural change, a term used to emphasise the influence of cultural capital on individual and community behaviour (Luiz & Mariotti, 2011). It refers primarily to man-made, intangible elements which affect people’s behaviour, relationship, perception and way of life, and their survival and existence (Robaro & Mamuzo, 2012; Luiz & Mariotti, 2011).
Culture is a set of historically evolved, learned values, attitudes, and meanings that are shared by the members of a given community and, as such, it influences the material and non-material way of life of the members (Tayeb, 1998; Brown & Ulijn, 2004; Azim, 2008). The socio-cultural environment consists of all the elements, conditions and influences which shape the personality of an individual and potentially affect his attitude, disposition, behaviour, decisions and activities. Such elements include beliefs, values, attitudes, habits, forms of behaviour and life styles of people as developed from cultural, religious, educational and social conditioning (Robaro & Mamuzo, 2012; Adeleke, Oyenuga, & Ogundele, 2003).
Some cultures and cultural groups might be more attracted to entrepreneurship than others (Mueller & Thomas, 2001; Azim, 2008). In a cross-country study in Australia, Slovenia, Mexico, North America, Finland, Scotland, the RSA and Kenya, Morrison (2000) concluded that a significant relationship exists between entrepreneurship and the regional culture. Morrison concluded that the cultural context in which people are rooted and socially developed does play an influential role in shaping and making entrepreneurs and also the degree to which these cultural groups consider entrepreneurial behaviour to be desirable (Morrison, 2000; Azim, 2008).
Often, the decision to become self-employed might stem from the push effect of unemployment or from the pull effects induced by an economy that are producing entrepreneurial opportunities (Barringer & Ireland, 2008; Deakins & Freel, 2012). Similarly, Reynolds (2003) distinguishes between ‘opportunity-based’ and ‘necessity-based’ entrepreneurship. In Reynold’s view (2003), opportunity-based entrepreneurship involves those who choose to start a business by taking advantage of an entrepreneurial opportunity while necessity-based entrepreneurship involves individuals who start a business because other employment options are either absent or unsatisfactory.
Often, exposure to discrimination might restrict minority groups in finding satisfactory employment. These minority groups are then forced into necessity-based entrepreneurship as the only viable way to be employed. This form of discrimination can emerge typically in religious, cultural, ethnic, migrant or other socially marginalised or minority groups (Kets de Vries, 1977; Roberts & Wainer, 1996; Azim, 2008). Additionally, a marginalised social position often has psychological effects on individuals that can cause forward-looking individuals to consider necessity-based entrepreneurship as an attractive alternative in career choice (Hoselitz, 1975; Azim, 2008).
Similarly, Hagen (1962) postulates that creative innovation is the fundamental characteristic for economic growth and that such innovation or change requires creative individuals. According to Hagen (1962), such growth in a society is led by individuals from some distinctive groups, and not by randomly distributed individuals throughout a society. In Hagen’s (1962) view such creative personalities or groups emerge when the members of the social group experience ‘the withdrawal of status respect’. This ‘withdrawal’ might occur when a traditionally homogenous group is displaced by force from its previous status by another traditional group, or when a superior group changes its attitude towards a subordinate group or in migration to a new society (Hagen, 1962; Azim, 2008).
In RSA, before 1994 the institutionalised segregationist and apartheid policies separated white people from non-whites, non-whites from each other and ethnic groups among Africans from each other (Parashar, 2014). With the strict division of labour; the legislated separate areas; the creation of ten predominantly rural, tribal homelands; and procedures such as pass laws, forced resettlement programmes, and strategically located economic growth points near homelands, the Apartheid Government restricted Non-White migration into the White urban areas. This Apartheid vision of separate development for separate groups ended in 1994 when Nelson Mandela was elected President. But still today, more than twenty years after the apartheid era, the people of RSA are highly politicised and the society still shows an extremely high level of inequality in income that is aggravated by the lack of formal job opportunities and sluggish economic growth (Mbeki, 2011; Parashar, 2014).
Since the early 1990s, the public sector, agriculture, mining, and manufacturing dominated formal employment in RSA. Disturbingly the number of public sector employees continues to increase. Currently more than 25 percent of the formally employed in RSA works in the public sector, with a significant proportion working in education and health-related fields (Parashar, 2014). Besides being the primary source of first employment, the public sector has implemented policies aimed to narrow the gender and race wage gap, resulting in a widened range of opportunities available specifically to Black graduates while, on the other hand, limiting opportunities for other minority groups in RSA (Woolard, Finn, Argent, & Leibrandt, 2010).
Additionally, a rural-urban labour divide still exists in RSA. Most business and economic activity is concentrated in Gauteng, KwaZulu-Natal and the Western Cape with little new economic activity in any of the vast rural parts of the country (Standing, Sender, & Weeks, 1996; Woolard, Finn, Argent, & Leibrandt, 2010).
However, most historically marginalised groups remain economically excluded from the economy despite the favourable labour legislation that supports BBBEE (Horwitz & Jain, 2011). The on-going unemployment can possibly be attributed to the strong bargaining powers of the trade unions and the implementation of firmer labour laws that force employers to sub-contract or not employ (Bhorat, Lundall, & Rospabe, 2002; Ayankoya, 2013). Because of the complex labour issues in RSA, the capital intensification of traditionally resource-based industries and demand for skilled workers in various economic activities have reduced the absorption rate of unskilled labour in the country, and will continue to do so in future. (Woolard, Finn, Argent, & Leibrandt, 2010; Parashar, 2014; Jansen & Harbour, 2011). As a result, society still shows an extremely high level of inequality in income that is aggravated by the lack of formal job opportunities and sluggish economic growth. This has created a labour market that hinges on contingent, part-time, or even home-based low-wage and low-status self employment with limited financial and social benefits (Bhorat, Lundall, & Rospabe, 2002; Parashar, 2014).
Disturbingly, early-stage entrepreneurial activity is also declining in RSA, from 7.8 percent in 2008 to 5 percent in 2009. The result is stagnation in the structural transformation of the economy, keeping the country dependent on sectors such as agriculture and mining where looting, instability, violence and rent-seeking are endemic in spite of plentiful natural resources (Amoros & Bosma, 2013). As an additional consequence, manufacturing is becoming increasingly uncompetitive and so the economy becomes less innovative (Naude, 2013).
Government’s leaders should have used the strengths of RSA to minimise or rectify the weaknesses of the extremely high levels of inequality in income and the lack of formal job opportunities. Instead, the current government identified its supporters, satisfied their short-term consumption demands, distributed jobs to the ruling-party faithful and provided social welfare to the poor (Du Preez, 2011). According to Mbeki (2011) this recipe for incompetence and corruption is essentially referred to as BBBEE. According to Mbeki (2011), BBBEE promotes a class of politicians dependent on big business and an anti-entrepreneurial culture while legitimising an environment of entitlement.
The solution, according to Mbeki, is not the creation of a state-owned economy but for entrepreneurial activity to be considered, at national level, as an important mechanism for economic development, job creation, innovation and the welfare of the bigger population (Wennekers, Guerrero, Bosma, Amorós, & Martiarena, 2013; Mojica, Gebremedhin, & Schaeffer, 2010; Woolard, Finn, Argent, & Leibrandt, 2010).
As far back as the early 1900s, important contributions to the literature about religion and entrepreneurship was made by researchers like Weber (1947) and Tawney (1926). Observing religious groups such as the Quakers, Weber (1930) found strong links with entrepreneurial activities and the activities of religious members and philanthropists. The church has always attempted to support economic solutions to poverty and social problems through social and normal entrepreneurial activities (Nash & McLennan, 2001; Sherman & Hendricks, 1992; Troeltsch, 1959; Martes & Rodriguez, 2004). More recent research (Balog, Baker, & Walker, 2014; Calitz, Cullen, & Boshoff, 2013; King-Kauanui, Thomas, & Sherman, 2012) has contributed to a greater understanding of the motivation of religious entrepreneurs, their mind-sets, their sense of calling, their purpose, their individual attitudes and behaviour, as well as their personal values and belief structures (Bird & Schjoedt, 2009).
A literature review on national and social culture reveals two alternative perspectives on culture (Hofstede, 2001; House, Hanges, Javidan, Gupta, & Dorfman, 2004; McGrath, Macmillan, Yang, & Tsai, 1992). Firstly, the values perspective is the dominant approach in international business research and is particularly useful when predicting rates of entrepreneurship (Hofstede, et al., 2004; Uhlaner & Thurik, 2007; Stephan & Uhlaner, 2010; Shteynberg, Gelfand, & Kim, 2009). The second perspective of socio-culture dates back to Weber’s thesis of 1930. Weber (1930) postulated that Protestant values foster entrepreneurial skills (Miller & Jackman, 1998; Weber, 1930) and that the socio-cultural factors are deeply rooted elements of a particular society. These factors encompass the values, attitudes, norms, practices, institutions, stratifications, and related ways of that society. Some regions seem more favourable than others for the establishment of new businesses because of certain characteristics in the population or to other environmental aspects that enable potential entrepreneurs to use their skills to exploit opportunities more easily (Azim, 2008; Aslan Gümüsay, 2015).
Azim (2008) illustrates these environmental aspects with the example of a low-income, rural environment. In such an environment, both opportunities and resources will be limited. The local population will probably contain only a limited number of potential clients because of their limited income potential, restricting the value and number of local opportunities on which the entrepreneur can capitalise. These limitations snowball to limit access to social and to financial resources. Additionally, in areas of business such as tourism, the demand might also be seasonal, which might restrict opportunities for entrepreneurs in these areas further.
Members of a community learn the shared characteristics of their family, religion, formal education and the society in which they function as a whole in a process of socialisation (Tayeb, 1998). Some individualist cultures might encourage entrepreneurship while some collectivist cultures might perceive entrepreneurial work as negative (Azim, 2008). Different theories exist as to why a particular country has a greater entrepreneurial culture than another. One of these explanations (Pinillos & Reyes, 2011) implies that, in the countries where a greater proportion of the population has entrepreneurial values, a greater prevalence of entrepreneurial behaviour will be observed (Davidson & Wiklund, 1997). It can be assumed that individuals with a greater entrepreneurial spirit are more likely to create new firms. Individualism is one of the factors related to the profile of an entrepreneur but is also associated with the motivation to achieve and the pursuit of personal goals.
An influential study by Hofstede (1994) involving 16,000 respondents working for IBM subsidiaries in 70 different countries, identified that the values and beliefs held by members of cultures affect the behaviour of these individuals (Leemkuil, 2014). Hofstede reports that culture is ‘the collective programming of the mind that distinguishes one group or category of people from another’. Hofstede (1994) splits this programming into four dimensions of cultural beliefs and values. Table 2.6 below shows the four dimensions and indicates the probable influence these dimensions have on an individual’s entrepreneurial behaviour.
|Individualism vs. Collectivism depends on the degree to which individuals see themselves being independent from social groups and differing from others (Leemkuil, 2014).||In a collectivistic society the interest of family and society is given preference over the interest of the individual. Individuals tend to maintain an interdependent view of self, as opposed to independent, and are not always free to choose a career on their own.||In these collective cultural groups, individuals accept more family responsibilities and that affects their financial behaviour. Often, the earners maintain large extended families and, as a result, saving for investment purposes does not take preference. This behaviour hampers the development of capital markets/formal money markets in the community (Azim, 2008; Hofstede, 1994).|
|Uncertainty avoidance vs. Uncertainty acceptance depends on the tolerance of ambiguity and uncertainty in a society.
|Uncertainty avoidance scores high when the culture is uncomfortable in surprising situations (Leemkuil, 2014).
|Entrepreneurship includes a measured component of risk and that often results in uncertainty. In a culture that is high in uncertainty avoidance, individuals might be more concerned about job security and a constant source of income that comes from formal employment than a risky career in an uncertain environment (Azim, 2008; Hofstede, 1994).|
|The Power Distance Index measures the extent to which a society expects power to be distributed unequally (Leemkuil, 2014).||In a society with a high Power Distance Index, individuals give preference to the views of the elders. These individuals tend to maintain differences among the social classes and these societies encourage duplication and preservation of traditions.||A high Power Distance Index restricts individual choice and innovation and is contrary to the spirit of entrepreneurship (Azim, 2008; Hofstede, 1994)
|Masculinity vs. Femininity refers to cultures where traditional male or female values are high.||The Masculinity Index describes the degree to which masculine values such as competitiveness and the acquisition of wealth are valued over feminine values such as relationship building and quality of life.||Masculinity typically represents preferences for achievement, heroism, power, assertiveness and material rewards for success. Femininity typically represents a preference for co-operation, caring for the weak, modesty and nurturing (Azim, 2008; Hofstede, 1994; Leemkuil, 2014).|
Source: (Hofstede, Hofstede, & Minkov, 2010; Hofstede, 1994)
According to Adams & Spinelli (2012) many of the skills of entrepreneurship can be developed through education and training. Adams & Spinelli (2012) distinguish between some entrepreneurial character traits that can be learned and some that are innate and perhaps characterise ‘born Entrepreneurs’ from ‘made entrepreneurs’. In Adams & Spinelli’s (2012) view, education in entrepreneurship has the same long-term payoff as is found in the typical forms of higher education.
There are many international organisations linking learning in entrepreneurship to growth and creation of employment in countries (Naude, 2011; Nel, Prebble, & Erasmus, 2008; Giacalone, 2004). As examples, the United Nations University World Institute for Development Economics Research (UNUWIDER) and the International Labour Organisation (ILO) are promoting small business development and entrepreneurship as key components of new economic strategies, especially when entrepreneurship fosters job creation, prosperity and wealth creation in developing nations (Khan & Almoharby, 2007; McMullan & Long, 1990). The ILO has been promoting SMME development through its Management Development Branch by designing programmes, providing expertise and preparing training materials in many developing countries since 1977 (Naude, 2011; Loucks, 1986; Khan & Almoharby, 2007).
Similarly, the recognition of the importance of the SMME sector has seen the advent of other entrepreneurship development programmes in many developing nations. For example, the National Institute for Development of Skilled Labour in Thailand provides pre-employment training in the fields of welding, mechanical work, electrical skills, radio-television repair, drafting and surveying, all of which are aimed at boosting the supply of skilled workers to SMMEs (Khan & Almoharby, 2007). In Malaysia, and the Philippines, specific entrepreneurship development programmes are organised to select, train and assist entrepreneurs in the development of new SMMEs. Similar education and training for entrepreneurship development have been initiated in countries such as Australia, Bangladesh, China, France and Bahrain (Vesper, 1986; Shapero, 1985; Khan & Almoharby, 2007; Nelson, 1986).
With a view to creating employment and regional development, the number of government programmes for SMMEs and entrepreneurship is increasing in many economies (Brockhaus, 1991). Brockhaus (1991) identified government programmes in Japan, Korea, Egypt, RSA, Kenya, India, Australia and New Zealand, all aimed at fostering entrepreneurship education and development. Similarly, many African countries like Gambia, Nigeria, Malawi, Zimbabwe, Swaziland, Uganda, and Kenya have also introduced entrepreneurial skills development programmes because of the belief that individuals with entrepreneurial skills are needed to start SMMEs to solve problems of unemployment by promoting small business enterprises and entrepreneurial behaviour (Khan & Almoharby, 2007; Nafukho, 1998; Smith, 2011).
The implementation of entrepreneurship education in the academic field can be traced as far back as 1938 to Professor Shigeru Fuji at the Kobe University in Japan (McMullan & Long, 1990). By 1970, there were approximately 25 institutions of higher education offering courses in the field of entrepreneurship in the USA alone. In the USA, this number grew to over 150 by 1980 and, by 1985, there were 253 courses, of which 212 were in business schools and 41 in engineering schools, located at 245 institutions. By 2007, that number had increased to over 500, and universities are still reporting a record number of students enrolling each year (Khan & Almoharby, 2007).
By 2007, many universities in Southeast Asia had courses in entrepreneurship and small business from undergraduate to MBA levels. Additionally, a number of institutions have established centres for entrepreneurship and small business development, for example, the Institute for Small-Scale Industries at the University of the Philippines, the Malaysian Entrepreneurship Development Centre (MEDEC) at the Institute Technology Mara in Malaysia, and the Nanyang Technological University (Meredith, 1986; Khan & Almoharby, 2007).
Through various activities such as teaching and research, conferences and seminars, publication and consultancy work, the Entrepreneurship Development Centre (ENDEC) at the Nanyang Technological University has emerged as a pioneering institution in fostering entrepreneurship in the Asian region. In recent years, two journals that were published, The Journal of Enterprising Culture from the ENDEC and the Malaysian Journal of Small and Medium Enterprises (MJSME) from the University Pertanian Malaysia, focus on the field of entrepreneurship and small business development education and research (Khan & Almoharby, 2007; Mondal, 2014).
Most of the existing research in the field of entrepreneurial learning is related to the managerial tasks and managerial skills required to conduct business. It includes subjects such as strategic and operational business planning, book-keeping and financial skills. This learning does little to explain how entrepreneurs actually solve business problems and learn reflectively (Gibb, 1997; Wang & Chugh, 2014; Rae, 2005). Cope (2005) suggests that entrepreneurial learning and business skills’ development are affected by the extent to which the prospective entrepreneur interacts with organisational stakeholders, bringing knowledge, skills, values and attitudes together, culminating the learning process (Cope, 2005; Wang & Chugh, 2014; Politis, 2005).
Entrepreneurial learning happens when entrepreneurs make sense of the world around them and change it in some arresting manner (Starbuck, 1983; Thorpe, Gold, Holt, & Clarke, 2006; Fiol & Lyles, 1985; Rae, 2005). Entrepreneurial learning occurs when entrepreneurs interact to initiate, organise and manage ventures, transforming experience into action in a business setting to construct new meaning in the process of recognising and acting on opportunities (Rae & Carswell, 2001; Khan & Almoharby, 2007; Lee & Jones, 2008).
Entrepreneurial learning relies on ‘know-what, know-how and on know-who’ (Wang & Chugh, 2014). Know-what and know-how focus on information, knowledge and experience, including the accumulation and updating of knowledge (Minniti & Bygrave, 2001), the development of new knowledge (Politis, 2005), and the organisation of knowledge and information (Holcomb, Ireland, Holmes, & Hitt, 2009; Ravasi & Turati, 2005). The know-who provides formal and informal contacts and networks, and possible access to those with know-what and know-how (Gibb, 1997; Jones, Macpherson, & Thorpe, 2010).
Learning styles might include experiential learning (Kolb, 1984) or ‘learning-by-doing’ (Balasubramanian, 2011). This includes learning from past experiences (Politis, 2005; Sardana & Scott-Kemmis, 2010), learning from positive and negative experiences (Minniti & Bygrave, 2001), learning from participation in events and from studying the experiences of others (Lévesque, Minniti, & Shepherd, 2009).
Depending on an organisation’s social or environmental context, the entrepreneurial learning processes might include team behaviour and learning to work in a group in an entrepreneurial way (Rae, 2000). Entrepreneurial learning might also involve a dynamic process characterised by ongoing knowledge acquisition, organisation, development and creation (Minniti & Bygrave, 2001). The expected outcomes of entrepreneurial learning generally involve the modification of existing insights and behaviours or the development of new insights and behaviours, which might be embedded in multi-faceted entrepreneurial activities (Khan & Almoharby, 2007).
The entrepreneurial process involves creating value or wealth by devoting the necessary time, skill, resources and effort, while assuming the accompanying financial, psychological and social risks and uncertainty, and receiving the resulting rewards and personal satisfaction (Hisrich, Peters, & Shepherd, 2010). Dorf and Byers (2008) postulate that the entrepreneurial process has four distinct phases. These phases are introduced in Table 2.7 below.
|Phase 1||Identify and evaluate the opportunity.||An opportunity is a gap left in the market by those who currently serve it.
Converting ideas into opportunities requires a process of evaluation (Nieman & Nieuwenhuizen, 2009).
A good opportunity is one that is attractive, durable, timely and anchored in a product or service that creates or adds value for the buyer or end user (Timmons & Spinelli, 2009).
|Phase 2||Develop a business plan.||A business plan is an essential part of taking an idea through the opportunity qualification process.
A business plan will expose the weaknesses in the thinking processes and re-introduce most of the oversights that might be created in the excitement of the new business idea and, thus, reduce the risks for the entrepreneur.
A business plan is an essential tool to acquire funding from either financial institutions or venture capitalists (Dorf & Byers, 2008).
|Phase 3||Determine the resources required.||The entrepreneur must assess and determine the resources needed to realise the opportunity (Dorf & Byers, 2008).
Entrepreneurs pursue new business opportunities relentlessly, without becoming deterred by the limited resources that they might control.
One of the key skills is to distinguish between the resources that are absolutely critical and those that would be nice to have. Secondly, knowing how and where to get critical resources and how to manage and allocate them enables entrepreneurs to achieve goals that often require considerably more resources than they control (Price, 2011).
|Phase 4||Start and manage the enterprise.||Entrepreneurs must operationalise and implement the stated business and strategic plans.
Often, during implementation, operational problems such as management style, structure and determining the key variables for success must be examined and re-examined (Hisrich, Peters, & Shepherd, 2010).
Source: (Dorf & Byers, 2008)
Timmons and Spinelli (2009) developed a similar entrepreneurial process model. The model is shown in Figure 2.1 below. The Timmons Model of Entrepreneurship considers opportunities, teams, and resources as the three most critical factors available to an entrepreneur, and holds that success depends on the ability of the entrepreneur to balance these critical factors.
Source: (Timmons & Spinelli, 2009)
The components of the Timmons Model are in constant motion, expanding and contracting as the environment and opportunity change. The model dictates that the entrepreneurial process does not start with a business plan, money, strategy, networks or team but is opportunity driven. Opportunities are more essential than the talent or competence of the lead entrepreneur and the team because a good opportunity ensures long-term success of the business.
In the Timmons Model, the entrepreneur searches for an opportunity and, on finding it, shapes the opportunity into a high-potential venture by drawing up a team and gathering the required resources to start a business that can capitalise on the opportunity. Most often, opportunities are bigger in scope than either the talent or capacity of the team or of the resources at the outset. The business plan provides the language and code for communicating the quality of the three driving forces and of their fit and balance.
Secondly, the team removes the ambiguity and uncertainty of the opportunity by applying creativity and leadership to manage the available resources in the most effective manner by interacting with exogenous forces and the capital market context that keeps changing constantly.
Thirdly, the Timmons Model discounts the popular notion that extensive resources reduce the risk of starting a venture. The model encourages boot-strapping or starting with the bare minimal requirements as a way to attain competitive advantage.
The role of the lead entrepreneur includes building a good resource base from which to draw and developing a business plan that balances the available resource with the opportunity and the potential of the team. An effective lead entrepreneur puts the best talent together after identifying the opportunity and gathering the required resources. Of all the resources, only a good team can unlock the high potential of any opportunity and manage the pressure related to growth (Timmons & Spinelli, 2009).
In the USA, almost 90 percent of companies employ fewer than 20 people and more than 50 percent employ fewer than five people (Kuratko & Welsch, 2004) but there is no universal distinction between entrepreneurial and small business. According to Wickham (2004), small business management is concerned with the management of an established business or a start-up business with products or services that are not necessarily new and innovative. Scarborough, Wilson and Zimmer (2009) define a small business as any business that employs fewer than 100 people. According to Nieman and Nieuwenhuizen (2009), a small business is any business that is independently owned and operated, not dominant in its field of business and does not engage in new marketing or innovative practices, and small business owners are individuals who establish and manage their businesses with the principal purpose of furthering their own personal goals.
For this study, the researcher used the definition contained in the South African Small Business Amendment Act 29 of 2004 (National Small Business Amendment Act, 2004). The Act defines a small business as a separate and distinct business entity, including co-operative enterprises and non-government organisations, managed by one or more owners, which are predominantly carried on in any sector or sub-sector of the economy. The Act further classifies, defines and describes micro, very small, small or medium enterprises (Mahembe, 2011). The classifications are illustrated in Table 2.8 below.
|Enterprise Size||Number of Employees||Annual Turnover
|Gross Assets, Excluding Fixed Property|
|Medium||Fewer than 100 to 200, depending on industry.||Less than R4 million to R50 million depending upon industry.||Less than R2 million to R18 million depending on industry.|
|Small||Fewer than 50.||Less than R2 million to R25 million depending on industry.||Less than R2 million to R4.5 million depending on industry.|
|Very Small||Fewer than 10 to 20 depending on industry.||Less than R200 000 to R500 000 depending on industry.||Less than R150,000 to R500,000 depending on industry.|
|Micro||Fewer than 5.||Less than R150,000.||Less than R100,000.|
Source: (Mahembe, 2011)
According to Wickham (2004) an entrepreneurial business can be distinguished from a small business by three factors. These factors are discussed in Table 2.9 below.
|Attribute||Description||Entrepreneurial Venture||Small Business|
|Innovation||Entrepreneurship is about new ways of doing things.||The entrepreneurial venture is structured to encourage innovation and differentiated product offerings.
|A small business is involved only in established markets, products or services.|
|Potential for Growth
|An entrepreneurial venture has greater potential for growth than a small business.||An entrepreneurial venture drives towards the creation of its own new markets.
|A small business operates within its own established markets.|
|Strategic Objective||An entrepreneurial venture distinguishes itself by its strategic objective.||An entrepreneurial venture sets objectives such as the creation of a sustainable competitive advantage, market development or growth, market share and market position.||A small business operates within the known and familiar.|
Sources: (Wickham, 2004)
According to Wickham (2004), it is possible that a small business demonstrates one or even more entrepreneurial characteristics but, in this view, the key, distinguishing characteristic of the entrepreneurial venture is the strategic objective.
The word ‘success’ can be defined as ‘the favourable or prosperous termination of attempts or endeavours’ (Fisher, Maritz, & Lobo, 2014). Other definitions include: ‘a person that achieves desired aims or attains prosperity’ (Oxford, 2015), and ‘the achievement of an action within a specified period of time or within a specified parameter’ (Directory, 2015). Thus, entrepreneurial success refers to the success of a venture and the success of the entrepreneur connected to the venture.
Success is both subjectively and objectively determined. What is favourable to one business might not be to another (Fisher, Maritz, & Lobo, 2014). Perceived entrepreneurial success is considered to be a multi-dimensional phenomenon that can be understood by implication or context (Delmar, Davidsson, & Gartner, 2003). For this reason, it is often found as the dependent variable in empirical research, as it is in this study, (Brockner, Higgins, & Low, 2004).
Examining only one aspect of entrepreneurial success is thus restrictive and does not illuminate all the processes involved in entrepreneurial success (Rauch & Frese, 2000; Davidsson, Steffens, & Fitzsimmons, 2009). Fried and Tauer (2009) propose a measurement index of entrepreneurial success that consists of the total cost of the resources used by the enterprise, owner hours or the commitment and effort of the entrepreneur to the enterprise, total revenue, and revenue growth, while Liechti, Loderer and Peyer (2009) developed performance indicators using industry-adjusted scales such as aggregate income and return on initial invested capital. Caliendo and Kritikos (2008) measured entrepreneurial success in terms of how many employees are hired or jobs created and Steffens et al. (2012) measured entrepreneurial success by goal achievement, economic success, lifestyle success, and company growth.
Thus, entrepreneurial success is often characterised by the presence or the perception of advantages of physical or emotional rewards (Alstete, 2008). Fisher, Maritz and Lobo (2014) suggest that the antecedent factors of Entrepreneurial success, as described in Table 2.10 below, are readily identified to include psychological, economic, sociological, and managerial factors.
|Psychological Factors||The need for achievement;
Low or sensible risk taking;
A positive attitude;
Locus of control;
Self-leadership (D’Intino, Goldsby, & Houghton, 2007);
Persistence (Caliendo & Kritikos, 2008; Timmons & Spinelli, 2009);
Self-efficacy (Nel, Prebble, & Erasmus, 2008);
A blend of creative, analytical, and practical intelligences (Sternberg, 2004).
|Economic Factors||The effective use of planning, strategy development, innovation;
The ability to deal with varying economic conditions (Rauch & Frese, 2000; Adams & Spinelli, 2012).
|Social Factors||The strength of social networks and connections;
The social skills of the entrepreneur (Brush, 2008; Deakins & Freel, 2012)
Boot-strapping (Brush, 2008);
Enjoying the rewards of entrepreneurship including:
Ability to learn from successes and failures;
Luck and survival beyond start-up stage.
Source: (Fisher, Maritz, & Lobo, 2014; Alstete, 2008)
Success measures might also be influenced by the area or type of entrepreneurship in which the entrepreneur is engaged (Fisher, Maritz, & Lobo, 2014). For example, a social entrepreneur may not use wealth creation and profit maximisation as important measures of success, but indicators based on the reach, uptake, or impact of their social business activities in the areas where they function (Austin, Stevenson, & Wei-Skillern, 2006). Similarly, entrepreneurs that strive to create value or use a value-packed vision to drive their ventures, could employ an individualised range of indicators to identify their own entrepreneurial success or failure (Fisher, Maritz, & Lobo, 2014; Bolton & Thompson, 2005; Brush, 2008).
The managed economies of the 1970s to the 2000s were characterised by reliance on big business and mass production to create value, opportunity and jobs (Barringer & Ireland, 2008; Carter, Stearns, Reynolds, & Miller, 1994). After that era, these economies have made way for modern entrepreneurial economies where knowledge-driven goods and services are provided by smaller, innovative, business ventures (Bosma & Levie, 2009).
The growth in the developing and emerging markets such as Brazil, Russia, India and China (BRIC) is driven mostly by the entrepreneurial revolution which will have to continue to stimulate more innovative entrepreneurs if these countries want to sustain and increase their current growth rates (Wennekers, Guerrero, Bosma, Amorós, & Martiarena, 2013). Even in the least developed world, in regions where dependence on aid is still high, donors are now beginning to favour private sector development and entrepreneurship as solutions for social problems (Naude, 2013).
According to the Global Competitiveness Index of 2014–2015, the world is slowly emerging economically from the financial crisis of 2008/9. The high interest rates for loans to governments are slowly being reduced and the international banking systems are becoming more robust. Access to credit, while still limited, is also slowly recovering. Overall, growth prospects, especially in advanced economies, are getting better, but the growth is still unevenly distributed (Bilbao-Osorio, et al., 2014). The recovery in the United States of America (USA) seems to be established as reflected in strong output and employment figures. Japan’s economy seems to be expanding after 20 years of stagnation. In Europe the picture is more mixed. Some European countries are recording stronger growth rates while others, such as Greece, suffer with weak internal demand, high unemployment and financial fragmentation (Bilbao-Osorio, et al., 2014).
The global economic outlook is improving, largely as the result of bold monetary policies carried out by the Federal Reserve and Central Banks in countries such as the United Kingdom and Japan. These economies increased the amount of money available to avoid a deeper recession temporarily, thus setting the foundation for the global recovery in the short term. However, favourable monetary policies alone will not sustain growth in the long run as much as boosting the level of productivity in these economies (Bilbao-Osorio, et al., 2014). Engaging in structural reforms and other productivity-enhancing investments is required to achieve the higher levels of productivity that are needed if the world is to consolidate and accelerate the recovery and create new opportunities and jobs for a larger segment of the population (Bilbao-Osorio, et al., 2014).
Additionally, the demise of communism in favour of capitalism has increased market integration. The development of new technologies is shifting attention away from industrial recruiting to less traditional business approaches, particularly entrepreneurship, to create economic growth and employment in most modern economies. Most forward-thinking governments are pursuing aggressive developmental strategies to achieve growth, development and economic goals.
This positive economic progress, created by the stimulation of further innovation, competition and the change in global business dynamics stimulates new business opportunities (Fritsch & Mueller, 2004; Naude, 2013). New businesses create new jobs, which result in more income generation and improved market competition, and an increase in the size of the economies (Deakins & Freel, 2012; Wennekers, Guerrero, Bosma, Amorós, & Martiarena, 2013; Naude, 2011).
The Global Competitive Index Framework (Bilbao-Osorio, et al., 2014) uses two criteria to classify countries as factor driven, efficiency driven or innovation driven economies. The first criterion used is the level of Gross Domestic Product (GDP) per capita at market exchange rates. Often, internationally comparable data on wages are not available. In these cases the GDP per capita at market exchange rates is commonly used as a proxy for wage data.
The second criterion is used to adjust for countries that would have moved beyond a factor-driven economy stage based on income, but where prosperity is based mostly on the extraction of commodities like minerals and oil. This second measure relates to the share of exports of mineral goods in the total exports of goods and services. This measure assumes that countries with more than 70 percent of their exports made up of mineral products, over a five-year average, are still in a factor-driven stage to a large extent (Bilbao-Osorio, et al., 2014).
Figure 2.2 below illustrates that countries in the factor-driven stage compete on the basis of their factor endowments, primarily natural resources and a big pool of unskilled labour. In these economies, companies often compete on price and focus on sales of basic products or commodities. Generally these companies have low productivity that reflects in the low wages they are able to pay. Competitiveness in the factor-driven economies hinges on well-functioning public and private institutions (Pillar 1), appropriate infrastructure (Pillar 2), a stable macro-economic framework (Pillar 3), and good health and primary education systems (Pillar 4) (Schwab & Sala-i-Martín, 2014).
As development advances, productivity and wages rise. At this stage, countries move into the efficiency-driven stage of development. Efficiency-driven economies develop more efficient production processes and improve on the quality of their products. At this point, competitiveness is driven by higher/better education and training (Pillar 5), efficient goods markets (Pillar 6), efficient labour markets (Pillar 7), developed financial markets (Pillar 8), the ability to harness the benefits of existing technologies (Pillar 9), and market size, both domestic and international (Pillar 10).
Economies that move into the innovation-driven stage have to sustain higher wages and a higher standard of living for their workers if they provide unique or new products (Pillar 11) to their markets. The companies competing in innovation-driven economies use innovation (Pillar 12) and sophisticated production processes to succeed and remain viable (Schwab & Sala-i-Martín, 2014).
|Figure 2.2: The Global Competitive Index Framework|
Source: (Schwab & Sala-i-Martín, 2014)
For the purpose of further discussion, specifically about entrepreneurship in RSA, Table 2.11 below lists 144 counties categorised into factor-driven, efficiency-driven and innovation-driven economies.
|Table 2.11: 144 Countries Classified as Economies that are Factor, Efficiency and Innovation Driven|
Source: (Bilbao-Osorio, et al., 2014)
The TEA index is an indicator or measurement of entrepreneurial activity in any country. The TEA index compares the number of individuals in the process of starting up and those who have been running new businesses for less than three-and-a-half years in the country being measured to the population of working age (18-64 years) of the country (Amoros & Bosma, 2013). The TEA index among the factor-driven economies tends to be the highest and declines in economies with higher GDP (Amoros & Bosma, 2013).
The Global Entrepreneurship Monitor (GEM) shows that, on the high side, Trinidad and Tobago (18 percent) and the United States (14 percent) reflect the highest TEA rates among the innovation-driven economies with Italy and Japan the lowest at 3.4 percent and 3.7 percent respectively (Singer, Amorós, & Arreola, 2014). The European economies have relatively low TEA rates with 7.8 percent in European Union economies and 6.0 percent in non-EU economies. The relatively low TEA rates in the innovation-driven economies can possibly be explained by the higher levels of GDP that result in more and better job opportunities, which reduce the need for entrepreneurship as a career option.
In the efficiency-driven economies, the highest TEA rates are found in the Latin American economies of Chile (25 percent), Indonesia (27 percent), and Ecuador (37 percent). In this group, lower levels of TEA are reported in the Middle East and North Africa (MENA) and 11 percent for RSA (Amoros & Bosma, 2013).
The factor-driven economies in the Sub-Saharan region of Africa have the highest TEA rates, especially Zambia (39 percent), Nigeria (39 percent) and Botswana (22 percent). These high TEA rates can probably be explained by fewer formal opportunities resulting in a higher level of necessity-based entrepreneurship. Additionally, the individuals in these factor-driven economies show a more positive attitude towards entrepreneurship such as perceived opportunities to start a venture and own perceived capabilities to do so, in comparison with individuals in efficiency-driven and innovation-driven economies. The fear of failure measurement is the highest among individuals in innovation-driven economies and is lower in efficiency-driven and factor-driven economies (Singer, Amorós, & Arreola, 2014).
The GEM (Amoros & Bosma, 2013) tracks early-stage entrepreneurial ambitions by observing, firstly, the perceived opportunities, secondly, the individuals own perceived skills to act as an entrepreneur and, thirdly, the individual’s fear of entrepreneurial failure. Individuals in the African economies tend to record the highest perception of opportunities available to them. Africans also have the highest perception of their skills to act entrepreneurially accompanied by the lowest fear of failure. Social values are also an important part of the decision to become an entrepreneur or not and, in most of the African economies, starting a new venture is seen as a good career choice. By contrast, individuals in the EU show the lowest levels in this regard (Singer, Amorós & Arreola, 2014).
The GEM (Amoros & Bosma, 2013) tracks job creation by observing the expectations of entrepreneurs. Early-stage entrepreneurs in North America stand out as the most optimistic with high expectations of job creation. The Non-EU, African, Latin American and the Caribbean economies have the lowest expectations for job creation. In the EU economies, such as Greece and Spain, only 3.2 percent and 4.4 percent of early-stage entrepreneurs respectively expect to achieve high levels of new job creation. In contrast, there are economies such as Thailand and Luxembourg, with almost full employment, where low expectations for job creation are connected with the lack of an available, skilled labour force and not entrepreneurial ambitions for job creation (Amoros & Bosma, 2013).
The GEM (Amoros & Bosma, 2013) tracks the intentions of early-stage entrepreneurs to build an international client base. The measurement is based on a calculation of the percentage of early-stage entrepreneurs with more than 25 percent of their start-up customers from abroad. Early-stage entrepreneurs in African economies have the lowest levels of international clients. Close to 70 percent of these African entrepreneurs do not have a single customer outside their own countries. The RSA is an exception in Africa, with 26 percent of early-stage entrepreneurs having more than 25 percent customers abroad.
In contrast, the highest level of international clients is present among early-stage entrepreneurs in EU economies. In Luxembourg, 42 percent of early-stage entrepreneurs have more than 25 percent of their customers abroad, in Croatia 38 percent, in Belgium 33 percent, and in Estonia 24 percent of early-stage entrepreneurs have more than 25 percent of their customers abroad. The same holds true for non-EU economies. Kosovo leads with 33 percent of early-stage entrepreneurs selling abroad, followed by Switzerland with 31 percent. Other small countries such as Suriname, Singapore or Barbados are also examples of high levels of international clients.
Measurements of innovative orientation are quite context-dependent. In many economies, products can be recognised as new, but the same products might already be old in other markets. The North American economies are more innovation-oriented than those of the rest of the world’s economies owing to the size of their own local markets, Asia and Oceania have high product innovation but less orientation to new markets. In Africa, the measurements of product innovation and orientation to new markets are low, again, with the exception of RSA (Amoros & Bosma, 2013).
The GEM (Singer, Amorós, & Arreola, 2014) tracks and measures the demographic characteristics of early-stage Entrepreneurs. This statistic contributes to the estimate of the level of inclusiveness in entrepreneurship in a country. Currently, the most active group of people in early-stage entrepreneurial activity is the 25-35 age group and some age groups are less represented in early-stage entrepreneurial activity. This could be explained by the lack of resources, especially among younger people and the lack of regulatory conditions for entrepreneurial activity amongst individuals older than 60.
The highest rate of discontinuation of businesses (11.0 percent) is found in the factor-driven economies, reducing to 4.5 percent in efficiency-driven economies and as low as 2.7 percent in innovation-driven economies. By far the most frequent reason given for discontinuation is a lack of profitability except in the North American economies, where personal reasons are in first place and non-profitability second. Personal reasons are placed second in all other regions. Lack of finances is placed third, but much less frequently in North America than in the rest of the world. In most of the African economies, a lack of finances is most frequent reason given, above personal reasons (Amoros & Bosma, 2013).
Africa can transform from bring the continent that needs assistance to being the continent of opportunity. Currently, Africa’s combined economic growth is second only to the East Asian region, and is higher even than that of China (Barton, 2013; Naude, 2013). Africa was also home to eight of the world’s fifteen fastest-growing economies between the years 2000 and 2013. The African continent’s GDP of more than $2 trillion in 2013 is now larger than India’s. Flows of private capital into Africa totalled $545 billion from 2003 to 2012, surpassing the inflows of official aid (Leke, Lund, Manyika, & Ramaswamy, 2014). Additionally, between 2005 to 2010, the African continent offered returns on foreign direct investment of 13.1 percent on average that are only slightly below those in Asia (14.1 percent), and substantially higher than those of the Latin Americas (8.7 percent on average) and the Middle East at 9.3 percent on average (Leke, Lund, Manyika, & Ramaswamy, 2014).
Despite the positive economic picture and encouraging trends that have emerged from Africa, the troubling reality remains that the everyday livelihoods of many Africans have not kept pace with the macro-economic growth, and the per capita GDP levels on the continent lag persistently behind the rest of the world. In Africa, entrepreneurship can probably address this income gap, if Africa’s entrepreneurs are able to evolve beyond their current state of necessity-based informality into a state that is vibrant and robust enough to promote sustained economic growth and generate long-term, viable livelihoods for its people throughout the continent (William, 2013).
It is necessary for business, and governments, to take the necessary action to strengthen the continent’s infrastructure in an effort to broaden economic growth in Africa. These infrastructure needs include Africa’s roads, railways, ports, airports and telecommunications systems. Additionally, the limited access to electricity and clean water poses a serious obstacle to the improved health and welfare of the people on the African continent. Africa’s poor infrastructure also hinders its integration into the bigger economies of the world and discourages outside investment, defeating the efforts of local entrepreneurs and raising the cost of doing business competitively on the continent. As an illustrative example, logistic costs are three to five times higher in Africa than in other emerging economies (Barton, 2013; William, 2013)
Research by the McKinsey Global Institute (Leke, Lund, Manyika, & Ramaswamy, 2014) shows that there is an opportunity to increase the impact of available funds and unlock further funding if and when leaders in African governments start applying the four levers of governance. The levers are discussed in Table 2.12 below.
|First Lever||Investments must target the critical priorities and needs that offer the biggest pay-offs first.||Ensure that infrastructure investments are made in accordance with cross-cutting national plans and strategies.|
|Second Lever||Infrastructure projects must be delivered more productively, increasing the value of the output of public spending.||Through better planning;
Earlier completion of feasibility studies;
More efficient procurement processes;
A move to medium-term, multi-year budgeting.
|Third Lever||Increasing the efficiency and productivity of the existing African infrastructure through better maintenance, improved regulation, or improved governance.||For example, spending $1 on road maintenance could provide a saving of $4 for a country’s economy.|
|Fourth Lever||Mobilising private capital investment through public-private partnerships can increase the potential and the availability of capital plus know-how for further investment in infrastructure.||Public-private partnerships will also ensure that infrastructure is delivered in a more efficient manner to end-users.|
Sources: (Leke, Lund, Manyika, & Ramaswamy, 2014)
The demand for capital in the African continent should increase by 8 percent per year between now and the year 2018. The annual growth in the resource-rich, African countries could reach 20 percent during this same period. Private equity and investment is set to grow rapidly. A total investment of more than $50 billion in the continent is possible over the next decade, but there will still be wide variations by country and by industry (Green, Kehoe, & Sedjelmaci, 2014).
Investors often prefer proven investment managers, and sizeable investments and diversification for their clients. As a result, investors might overlook some of the attractive and growing state and infrastructure funds in Africa. International investors might also be inclined to view investment in Africa as too risky and politically fraught. However, in the future, investors and multi-nationals seeking viable acquisitions might start looking beyond the normally active markets to target mid-size, African companies (Green, Kehoe, & Sedjelmaci, 2014).
The BRIC acronym refers to the grouping of the four largest developing countries of the world, namely, Brazil, Russia, India and China (BRIC). Combined, the BRIC countries comprise 40 percent of the world’s population and account for more than 25 percent of global GDP (Walters, 2011). It is anticipated that all of the BRIC countries will be in the top 10 largest economies of the world by the year 2020. China is forecast to be the largest economy in the world in terms of GDP between 2030 and 2050 (Herrington, Simrie, Kew, & Turton, 2011). By working together, the BRIC nations can effectively counter the deep-seated interests and organisational structures of the West (EconomyWatch, 2010). China will probably dominate in manufactured goods, India in services, and Russia and Brazil in supplying raw materials by 2030.
A common trait of the BRIC countries is the high percentage of GDP spent on research and development (R&D). On average, the BRIC countries spend more than most developed nations, contributing strongly to the growth in innovation, competitive business ideas and focusing on the development of human capital. Additionally, each of the BRIC economies has a very large local market for its own goods and services because of the size of the respective populations of the BRIC nations (Herrington, Simrie, Kew, & Turton, 2011). Table 2.13 below shows some key development indicators to demonstrate the buying power of these nations.
|Population (In 2009)||194 million||142 million||1.15 billion||1.33 billion|
|GDP (USD in 2009)||1.573 billion||1.232 billion||1.310 billion||4.985 billion|
|GDP (In USD per Capita in 2009)||10,499||14,913||3,015||6,778|
|GDP Avg. Growth Rate (1999-2009)||2.5 percent||0.3 percent||6.3 percent||10.1 percent|
|GDP Projected Ave. Growth Rate
(2011-14, as of April, 2011)
|4.2 percent||4.5 percent||8.1 percent||9.5 percent|
|Merchandise Exports (USD 2009)||153 billion||303 billion||162 billion||1,201 billion|
|HDI percent Change (1990-2010)||7,6 percent||3.8 percent||33.3 percent||44.2 percent|
b – Billion
m – Million
|HDI – Human Development Index
GDP – Gross Domestic Product
USD – United States Dollar
Source: (Walters, 2011)
China invited the South Africa to join the BRIC nations in December 2010. The new grouping is referred to as BRICS. When compared with the other BRICS nations, the RSA is the smallest in economic output with very low growth prospects at only 2.7 percent in 2012, while the average for the rest of Africa is expected to be more than 7 percent. The RSA has a total economy of $286 billion, less than 25 percent of Russia’s, and the population of 51.8 million (Stats, 2011) is about a third of Russia’s 142 million and Brazil’s 191 million (Walters, 2011).
According to Naidoo (2012), RSA is also losing out in terms of foreign investment to Nigeria, a country with a population of 155 million. However, what RSA lacks in demographic and economic clout, it makes up for by representing most of Africa at the BRICS table (Naidoo, 2012). RSA accounts for approximately one third of GDP in Sub- Saharan Africa and can provide the other BRICS members with improved access to Africa’s 800 million consumers and all its minerals and other resources (Herrington, Simrie, Kew, & Turton, 2011). RSA has a reasonably mature economy, sound corporate governance structures and a strong regulatory framework, which are attractive to foreign investors seeking a secure investment. Additionally, RSA has a strong platform in the Johannesburg Securities Exchange (JSE) on which investment throughout the continent is established. Many of RSA’s corporations already do business in Africa and are well placed to provide information and access to the other BRICS nations looking to invest in Africa (Naidoo, 2012). Table 2.14 below, compares the key indicators for the BRIC nations to those of the RSA, Sub-Saharan Africa and the two other, viable BRICS candidates.
|Development Indicators||BRICS Countries||Sub Saharan
|Other BRICS Candidates|
|GDP per Capita||10,499||14,913||3,015||6,778||10,278||2,162||4,151||2,203|
|GDP Growth (1990-2009)||2.5%||0.3%||6.3%||10.1%||2.5%||3.3%||5.0%||4.5%|
|GDP Growth (2011-2014)||4.2%||4.5%||8.1%||9.5%||4.0%||N/A||6.6%||6.5%|
b – Billion
m – Million
|HDI – Human Development Index
GDP – Gross Domestic Product
USD – United States Dollar
Source: (Walters, 2011)
Being part of BRICS will provide opportunities for entrepreneurs in RSA to access the markets in the other BRICS nations (Naidoo, 2012). RSA is uniquely placed to bring the African perspective to the BRICS forum, considering that RSA is already the largest investor of the developing nations in Africa and RSA’s priority in foreign policy is the African continent (Walters, 2011). Additionally, the BRIC nations will bring investments, knowledge and technologies not only to RSA, but the rest of Africa, accelerating its growth and development (Herrington, Simrie, Kew, & Turton, 2011).
Entrepreneurship has been described as the backbone of the booming economies of the world. The emerging economies are creating favourable environments for businesses and entrepreneurship (Kaplan & Warren, 2010; Naude, 2013). Governments, at national and local levels are focusing effort and resources, and are crafting policies that are specifically targeted at entrepreneurial development because of the obvious advantages of job creation, economic development and solutions to social issues (Andretsch, Grilo, & Thunik, 2009). However, some countries create an environment that hinders entrepreneurship. This is often evident in the government policies and regulations that create entry barriers and unfavourable environments for entrepreneurs (Klapper, Laeven, & Rajan, 2006; Naude, 2011).
According to Luiz and Mariotti (2011), RSA is not creating a sufficiently entrepreneurial economy. In RSA, the typical entrepreneur is a White or Indian male, 25 – 44 years of age, who lives in an urban area, is involved in the retail and wholesale sector, and has a secondary or tertiary level of education (Herrington, Kew, & Kew, 2014).
The exclusion of the bulk of the population from entrepreneurship in RSA must be addressed to create employment, expand markets, increase production and revitalise communities (Luiz & Mariotti, 2011; Naude, 2013). In the thriving economies in Asia, SMMEs make up 95 percent of all corporations. These SMMEs employ up to 80 percent of the labour force and constitute almost 60 percent of GDP in these economic regions. By contrast, SMMEs in RSA employ only 47 percent of the economically active population and contribute only 45 percent of the GDP (Stats, 2011).
Alarmingly, the level of business discontinuance in RSA still exceeds that of business start-ups, resulting in a net loss of small business activity and subsequent job losses. Just as elsewhere in Africa, most of these businesses cite lack of finance and poor profitability as the main reasons for these closures (Herrington, Kew, & Kew, 2014). For RSA to thrive economically, entrepreneurial activity must become the cornerstone of the government’s growth strategy (Bosma & Levie, 2009).
Similar to most of the other African economies, where unemployment is still high, the number of people forced to start businesses out of necessity should be high in RSA. However, the rate of early-stage entrepreneurial activity in RSA is less than a quarter of that in the other Sub-Saharan African economies. In RSA, early-stage entrepreneurial activity declined from 7.8 percent in 2008 to 5 percent in 2009. By comparison, individuals in BRIC countries such as Brazil, India and China, are two to three times more likely to become entrepreneurs than individuals in RSA (Wennekers, Guerrero, Bosma, Amorós, & Martiarena, 2013). The result for RSA is stagnation in the structural transformation of the economy by keeping the country dependent on sectors such as agriculture and mining where looting, instability, violence and rent-seeking are endemic in spite of plentiful natural resources. Other consequences are that manufacturing is becoming uncompetitive and the economy will become less innovative (Naude, 2013; Amoros & Bosma, 2013).
Encouragingly, early-stage entrepreneurial activity has increased marginally over the last 10 years in RSA but, again, it dropped by a staggering 34 percent, from 10.6 percent to 7 percent, in 2010 (Herrington, Simrie, Kew, & Turton, 2011). Three years after the FIFA 2010 Soccer World Cup, entrepreneurial activity in RSA has dropped to an alarming new low. Also low is the pool of intentional entrepreneurs who make up only 14 percent of the working population, far below the average of 27 percent among the other, similar, efficiency-driven economies (Herrington, Simrie, Kew, & Turton, 2011).
Of particular concern is that, in 2011, only 5 percent of people aged 18 to 24 were involved in early-stage entrepreneurial activity. Also, the TEA rates in the age group of 25 to 34 years were the second lowest of all the BRICS economies. The majority of school leavers are not pursuing tertiary studies but, with limited education they still form part of the labour force of the near future. With employment of youth aged 15 to 24 years at only 12.5 percent, only one in eight young people will get a job (National, 2011). This highlights the importance of finding alternative ways to increase participation in the economy, probably through some form of entrepreneurship (Mbeki, 2011; Kaplan S. , 2009; Kiss, Danis, & Cavusgil, 2012; Rettab, 2001).
The government of the RSA should consider entrepreneurial activity at national level as a critical mechanism for economic development, job creation, innovation and improved welfare of the population (Wennekers, Guerrero, Bosma, Amorós, & Martiarena, 2013; Kiss, Danis, & Cavusgil, 2012). It is of concern that RSA scored lowest among ten Sub-Saharan African countries in terms of individual perception of opportunities and own perception of capability, as well as intention, to act entrepreneurially (Herrington, Simrie, Kew, & Turton, 2011).
The GEM found one of the main impeding factors to early-stage entrepreneurial activity in the RSA to be regulatory policy. Long delays are still common in the business registration process and also finance programmes for start-ups are not readily available (Herrington, Simrie, Kew, & Turton, 2011). The list of issues making it difficult for entrepreneurs also includes corruption, ‘tenderpreneurship’ and nepotism at government level (Fritz, 2014). These difficulties, starting even at the highest levels of government, together with high levels of crime, an inadequately educated workforce, inefficiency and bureaucratic regulatory requirements make it difficult and often unsafe for potential entrepreneurs to start businesses in RSA. Often, these problems are exacerbated further by onerous labour laws, the strength of the unions and the low efficiency/productivity of the labour force (Herrington, Kew, & Kew, 2014).
Furthermore, the efforts of entrepreneurs will produce more results when attention is shifted from transfer of wealth, based on political or ethnic affiliation, to an approach centred more on entrepreneurship. The intentions of the codes such as BBBEE could yield more and better results when efforts are focused on entrepreneurial activities, the environmental issues that stifle entrepreneurship, and the regulatory barriers that make starting or growing businesses difficult for any individual or group in RSA (Ayankoya, 2013; Horwitz & Jain, 2011).
In RSA, the estimated unemployment amongst young people of working age is in excess of 60 percent. It is a daunting challenge to provide decent jobs or opportunities for this population group. Employability can be assisted and improved through proper education, specifically in the fields of mathematics and science. Disturbingly, the Global Competitiveness Report of 2014/15 rates RSA last out of 144 countries for mathematics and science education.
1.10.3 Perceived Opportunities, Own Capabilities and Entrepreneurial Intentions for Early-Stage Entrepreneurs in RSA
With an increase in total entrepreneurship and growing business activities come more jobs. More jobs will take unemployed people off the street, which will reduce crime and enable business and government to tackle many of the other social issues, which, in turn, will assist to improve the global competitiveness of RSA. This, again, will lead to a cycle of activities that will increase the TEA measurement by providing more opportunities in the market place (Ayankoya, 2013). Therefore, it is imperative that the government and the private sector work together to inspire potential entrepreneurs and to demonstrate their commitment to the competitiveness of the country in the global market (Porter, Sachs, & McArthur, 2002; Nieman & Nieuwenhuizen, 2009).
To increase the pool of potential entrepreneurs in RSA, firstly, the focus must be on increasing the levels of perceived opportunities through market dynamics and research and development (R&D). Secondly, there must be a focus on increasing levels of perceived entrepreneurial capabilities through education, especially in mathematics and science and related subjects, since one of the cornerstones for success in business is a mind that can solve problems and think quickly in the face of challenging and changing scenarios (Herrington, Simrie, Kew, & Turton, 2011; Naude, 2013).
Encouragingly, the findings from a survey of 609 university students in RSA revealed that over 83 percent of the students viewed entrepreneurship as an honourable profession (Luiz & Mariotti, 2011). More than 50 percent of these students intended starting their own business in the future and the students perceived themselves as risk-takers. From this data, it could be argued that, in RSA, university students are more entrepreneurial than less qualified youth (Luiz & Mariotti, 2011). However, this contradicts current evidence that university graduates seek employment in the corporate sector, favouring the financial security and better career prospects available in large corporations (Azim, 2008; Bosma & Levie, 2009).
The same study referred to above also revealed some distinct gender and racial differences amongst the student sample. Males were generally more positively disposed towards entrepreneurship and Blacks seemed to be most and Asians least positive about a future in RSA. Additionally, direction or field of study, parental income, student work and financial experience all appeared to affect the students’ perception of entrepreneurship (Luiz & Mariotti, 2011).
The RSA is one of the most diverse, sophisticated and promising, emerging market economies in Africa (SAinfo, 2013). RSA has a world-class infrastructure that includes a modern transport network, widely available energy and sophisticated telecommunications facilities. The country has seven commercial ports, by far the largest, best equipped and most efficient in Africa (SA.Com, 2016). The deepwater ports act as trans-shipment points between the emerging markets of Central and South America and the industrialised nations of South and Far East Asia (SAinfo, 2015).
The country’s good infrastructure and world-class banking system are two of the biggest enablers of entrepreneurial activity on the continent. RSA also offers a unique combination of a developed, first-world, economic infrastructure with a vibrant, emerging market economy. RSA is a good investment destination because of the business opportunities and markets within its borders and also the country’s ability to function as a gateway into the African continent (Herrington, Kew, & Kew, 2014). Additionally, the disciplined fiscal framework is aimed at promoting domestic competitiveness, growth and employment. The fiscal framework is also focused on increasing the economy’s outward orientation and attracting foreign investment. Additionally, taxes have been reduced, tariffs lowered, the fiscal deficit brought under control, and exchange controls relaxed, giving rise to a high level of macro-economic stability (SAinfo, 2013).
RSA’s legal system is founded on Roman-Dutch and English law, making commercial and legal practices globally relevant and in line with international norms and conventions. Additionally, the country has a modern, world-class Constitution that regulates human rights and all legislation and it guarantees the independence of the judiciary. The courts are also open to foreigners, on the same terms and conditions as the citizens, and all trade and industry is undertaken within the framework of a free-market, enterprise economy (Worldbank, Doing Business: 2016 Data for South Africa, 2016). Additionally, RSA has a well-developed and regulated competition regime based on best international practices. The regulators place various prohibitions on anti-competitive conduct that includes restrictive practices such as price fixing, predatory pricing, collusive tendering and abuse by monopolies (Worldbank, 2016). The Johannesburg Stock Exchange (JSE) rates among the top twenty stock exchanges by market capitalisation and is regarded as a mature, efficient, secure market with world-class regulation, trading, clearing, settlement assurance and risk management that offers superb investor protection (SAinfo, 2013).
RSA is also ideally positioned for investment access to the fourteen Southern African Development Community (SADC) countries. The SADC countries have a combined market of more than 250 million people. Being the most developed and dynamic force within the fourteen member SADC community, RSA can probably be considered the economic powerhouse of the continent. Additionally, RSA has strong relations with markets in Asia and Latin America, and an economic alliance with the BRICS members, supporting business opportunities for global companies in particular (Okonjo-Iweala, 2015).
RSA has developed a number of leading technologies, particularly in the fields of fuels and energy, steel production, deep-level mining, telecommunications and information technology (SAinfo, 2013). The country’s manufacturing output is increasingly focused on technology intensive, high-tech manufacturing sectors such as machinery, scientific equipment and motor vehicles. Ranked 52 out of 144 countries in the World Economic Forum’s Global Competitiveness Index for 2012, RSA’s incentives for value-added manufacturing projects, support for industrial innovation, improved access to finance, and industrial development zones in close proximity to major ports and airports, the world-class infrastructure, dedicated customs support and reduced taxation should offer an enabling environment for small businesses (Schwab & Sala-i-Martín, 2014).
Economically, RSA is characterised by low TEA rates, a rapid population growth, low GDP growth, low worker productivity and slow job creation (Van Wyk, Boshoff, & Kruger, 2004; Herrington, Simrie, Kew, & Turton, 2011). The country needs a more holistic approach to entrepreneurship and developmental policy that includes the socio-economic, demographic, cultural and institutional variables associated with the entrepreneurial attitudes of individuals in RSA (Luiz & Mariotti, 2011). Assessing the entrepreneurial environment in RSA, the National Experts Survey (NES) of 2011 rated the country’s physical infrastructure highest in terms of stimulating entrepreneurial activity, and the government’s entrepreneurship programmes scored the lowest. Much criticism was levelled by the NES at the proliferation of government agencies, with significant government funding, which has failed to address the needs of entrepreneurs in the country (Herrington, Simrie, Kew, & Turton, 2011).
The World Bank’s Doing Business Report ranked RSA 35th out of 183 countries in 2014, 69th in 2015, and 73rd in 2016 (Worldbank, 2015). This report ranks different countries according to the ease with which they do business defined by ten performance criteria: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. In 2011, the World Bank’s Doing Business Report rated RSA with the best regional performance in the following areas: the cost of starting a business, dealing with construction permits, getting credit, and protecting investors. However, the statistics for 2014, 2015 and 2016 indicate significant drops in most, if not all, of these measurement criteria. Table 2.15 below illustrates eight of the ten criteria on which RSA lost ground in rankings between 2015 and 2016 (Worldbank, 2016).
|Topic||DB 2016 Rank||DB 2015 Rank||Change in Rank|
|Starting a Business||120||113||-7|
|Dealing with Construction Permits||90||82||-8|
|Getting Electricity||168||168||No change|
|Protecting Minority Investors||14||12||-2|
|Trading Across Borders||130||130||No change|
Source: (Worldbank, 2016)
The RSA will need to address the following key issues to reverse these performance losses and improve on its economic competitiveness:
- The labour market efficiency, which is characterised by rigid hiring and firing practices, inflexibility in wage determination and significant tension in business relations between the workforce and employers.
- The quality of RSA’s education system remains poor, specifically the quality of mathematics and science education.
- RSA’s infrastructure, although good by regional standards, requires upgrading.
- Poor security and policing remains an obstacle to doing business in RSA. The cost of crime and violence to business and the sense that the police are unable to provide proper protection do contribute to an environment that is not competitive.
- The general poor health of the country’s workforce including the high rates of HIV and AIDS has added a big cost component to business.
- Corruption from the top down is having a massive impact on economic development and, unless it is brought under control, it will continue to have a major impact on early-stage entrepreneurial development(Worldbank, 2015).
In the past, the traditional Japanese society regarded entrepreneurial business activities as dishonourable and that attitude allowed the Chinese to enter the traditional Japanese business sectors successfully (Portes, Haller, & Guarnizo, 2009). A similar scenario seems to exist in RSA. The creative Nigerian, Pakistani and Ethiopian entrepreneurs are able to generate market niches for cultural products like food and ethnic goods (Radipere, 2012). With the necessary government engagement, these ethnic resources and business skills can be transferred to the local entrepreneurs, making a contribution to the problematic employment situation of young people in lower ethnic segments of the urban economy. This engagement should reduce the time it takes to obtain business permits and promote a culture of team-work in entrepreneurship, where potential entrepreneurs can learn from foreign business owners and integrate their strategies in managing their businesses, while getting government support (Radipere, 2012).
RSA has undergone unprecedented political, social and economic change with the disintegration of apartheid and the first democratic elections in 1994. Since then, the state has removed the racially exclusionary clauses in immigration legislation and this has changed the patterns of immigration. RSA was opened to immigrants, particularly from Africa, Eastern Europe and Asia (Perpedy, 2001). Attempts by the government to control the entry of migrants and immigrants into the country have not been very successful. Only a few of the migrant and immigrants qualify for business permits but some may hold permanent residence. Most of the migrants and immigrants appear to enter on visitors’ visas or to hold permits as asylum seekers or refugees (Peberdy & Crush, 1998).
Immigrants, in general, have lower labour force participation rates, lower employment rates, and are less qualified and, therefore, accept the less skilled jobs (Salaff, 2002). Often, this market position pushes immigrants to enter self-employment or necessity-based entrepreneurship (Chrysostome & Lin, 2010; Chrysostome, 2010). These immigrant, necessity-based entrepreneurs, mostly from the less developed countries, probably face challenges such as the lack of capital, especially at the beginning of their entrepreneurial activities. However, the lack of capital and their survival strategies have a low impact on the bigger economy of RSA. These businesses have small capital investments, employ fewer people and the entrepreneurs have a low level of business skills (Baltar & Icart, 2013).
Often, the immigrant community provides the immigrant entrepreneur with employees. The relationship between the immigrant entrepreneurs, doing business out of necessity, and the co-ethnic employees is one of solidarity (Radipere, 2012; Chrysostome, 2010). These entrepreneurs’ employees are often from their own communities and, in many cases, are family members who are flexible and do not expect to be paid like the employees from the formal RSA job market (Baltar & Icart, 2013). According to the Organisation for Economic Co-operation and Development (2013), immigrant entrepreneurs are more likely to start new businesses, but the failure rate of these businesses is higher than for citizens of RSA.
Nevertheless, the report (Lunati, 2013) also points out that immigrant entrepreneurs can contribute to economic growth. These immigrant entrepreneurs can bring new skills and competencies and reduce skilled labour shortages in RSA (Fatoki, 2014), creating new businesses in many sectors, including innovative ones, again contributing to job creation and general prosperity in RSA. Immigrant entrepreneurs can also play an important role in maintaining economic activities in certain areas that are at the risk of economic and demographic stagnation (Ayankoya, 2013).
The opportunistic immigrant entrepreneurs, including transnational immigrant entrepreneurs and global immigrant entrepreneurs move to their host countries for the purpose of seeking opportunity and undertaking entrepreneurial activities (Radipere, 2012). These immigrants are often academically or professionally trained and stay in the host country because of good jobs or to take advantage of entrepreneurial opportunities (Chrysostome, 2010; Salaff, 2002). These opportunity seeking, immigrant entrepreneurs, like any other opportunity-based entrepreneurs, create strategies, are alert to new information, and invest in additional resources to expand their businesses (Baltar & Icart, 2013).
This group of opportunistic immigrant entrepreneurs often includes second and third generation immigrants. The second and third generations are often proficient in English, educated and hold university degrees from the host countries’ universities, distinguishing them from necessity-based immigrant entrepreneurs who often are not formally educated (Chrysostome, 2010; Adendorff, 2004). The second and third generation, opportunistic, immigrant entrepreneurs often employ both host-country employees and co-ethnic employees. Compared with necessity-based immigrant entrepreneurs who depend on an ethnic enclave, opportunity-driven immigrant entrepreneurs are often fully integrated into their host country (Chrysostome & Lin, 2010).
Additionally, migrant entrepreneurs might increase cross-country trade by selling to their home countries, creating global markets for products from RSA (Ayankoya, 2013; Fatoki, 2014). Such trade increases the global competitiveness of RSA, creating further employment and providing the entrepreneurial role models that the people of RSA desperately require (Herrington, Xavier, Kelley, Kew, & Vorderwülbecke, 2012). Ayankoya (2013) suggests that government policy should encourage and assist the non-South African owned SMMEs instead of creating barriers that force many of the migrant entrepreneurs in South Africa to operate in the informal economy.
Often referred to as ‘Family entrepreneurship’, a family business is the most common approach to entrepreneurship (Heck, Hoy, Panikkos, & Steier, 2008; Bewayo, 2009). The economic importance of family businesses is well documented (Adendorff & Boshoff, 2011; Bewayo, 2009; Venter, Farrington, & Van der Merwe, 2012). In the USA, 78 percent of the wealth is generated by family-owned businesses. Similarly, in the UK, 75 percent of registered businesses are family-owned and, in RSA, families own close to 80 percent of entrepreneurial businesses and 96 percent of commercial farms. Family-owned businesses in RSA seem to be faring well and are more resilient in the face of tough economic times. Around 78 percent of family businesses in RSA reported growth in the last year and 21 percent of these family businesses are pursuing expansion aggressively into Africa and elsewhere (Hubbard, 2014; Venter, Farrington, & Van der Merwe, 2012).
However, family businesses are one of the most, complex, dynamic and unique systems in our modern-day society. A family business blends the two inherently different realms of the performance-based world of business and the emotion-based domain of the family together, which can create a system that is potentially fraught with confusion and conflict (Carlock & Ward, 2001; Hess, 2006; Swart, 2005). In a good family business, the deeply rooted family values guide the company and give it a sense of harmony, while family members understand and support one another as they work together to achieve the company’s vision, mission and goals (Adendorff & Boshoff, 2011; McCann, Hammon, Keyt, & Fujiuchi, 2004). However, the goals of performance and business outcomes on the one hand and the emotions of the family on the other might create a system fraught with confusion and conflict. Often, sibling rivalries and personality conflicts lead to battles that can tear families apart and destroy thriving businesses (McCann, Hammon, Keyt, & Fujiuchi, 2004; Pickard, 1999). Unfortunately, 70 percent of first-generation, family businesses fail to survive into the second generation and, of those that do, only 12 percent make it to the third generation. Just 3 percent of family businesses survive to the fourth generation (Hubbard, 2014; McCann, Hammon, Keyt, & Fujiuchi, 2004).
The leaders in these family businesses must be aware of the need to maintain a professional approach to the business and the family, adopting more formal business systems and processes. The key component when drawing on the expertise of external talent includes the development and documentation of formal processes and procedures that form the backbone of the business’s operations and provide it with the context and structure it needs to grow and adapt while ensuring good governance and sustainability (Hubbard, 2014; Adendorff & Boshoff, 2011).
In addition, succession planning remains one of the most significant risks to the survival of family businesses. Most of the larger companies incorporate succession planning as part of their long-term business planning, while most family owned businesses devote minimal attention and resources to this aspect. In RSA, only 13 percent of family businesses have discussed and documented succession plans. With the growing influence of the millennial generation, succession is becoming even more complex. The millennials believe that, once the hand-over has taken place, they can take charge and run the business as they see fit, while the preceding generation prefers to hand over but keep control and continue to make key strategic decisions (Adendorff, 2004; Hubbard, 2014).
A further, major reason why family businesses do not survive the hand-over from second to third generation is that the second generation was close enough to the first generation to understand the effort, time and compromises that were actually required to create the business and the third generation was often too far removed from the first generation and they were generally just on the easy, receiving end (Astrachan, 2003). Often, the only way to keep a family business sustainable is to hand the reins over to an outside leader with the right skills, capability and passion, who is better equipped to make the important strategic decisions (Hubbard, 2014).
According to the GEM survey of 2014, more men than woman are involved in early-stage entrepreneurial activity world wide. The survey also confirms that there is no or little difference between male and female entrepreneurs in terms of their individual attributes such as perceived opportunities and perceived capabilities, but fear of failure is slightly more evident in women than in men. Additionally, when comparing motives for early-stage entrepreneurial activity, women start a business venture out of necessity more often than men do (Singer, Amorós & Arreola, 2014).
In RSA, surveys conducted before 2010 have shown that men are 1.5 – 1.6 times more likely to be involved in early-stage entrepreneurial activity than women. Since then, however, there has been a marked increase in female entrepreneurship in the country. Yet in spite of the increase in female entrepreneurship, the perceived opportunities for woman in RSA to start a business, and the confidence in their own abilities to do so, remain alarmingly low compared with the perceptions of women in other Sub-Saharan African countries (Herrington, Simrie, Kew & Turton, 2011).
By 2014, the ratio of male to female participation in entrepreneurship in RSA changed to 1.2:1. Although the overall TEA rates in RSA are still low, almost 75 percent of TEA for both genders was opportunity-driven. Encouragingly, TEA for female, opportunity-motivated entrepreneurs has increased from 64 percent in 2013 to 71 percent in 2014. This statistic is now significantly higher than the 58 percent average for female entrepreneurs in Sub-Saharan African (Herrington, Kew & Kew, 2014).
In RSA business ventures owned by women tend to be smaller than their male-owned counterparts. The female entrepreneurs in RSA are often educated and well-primed for their role as business owners with many of them demonstrating excellent results and growth prospects. Some researchers of female entrepreneurs (Wilson, Whittam, & Deakins, 2004; Gheorghe & Adina, 2008) have argued that women bring a set of attributes and networks that are different from the existing, institutionalised networks found in a male-dominated business world and which cannot easily be matched. As a whole, female entrepreneurs in RSA are showing a remarkably positive attitude to the future, often more so than their male counterparts (Wilson, Whittam & Deakins, 2004; Ndziba-Whitehead, 1993).
Entering a life of entrepreneurship in RSA, is risky and difficult and far too few individuals of either gender are doing so currently. It does appear that the challenges facing female entrepreneurs are much the same as those facing their male counterparts and that gender plays little if any role in this (Tag & Wilson, 2013). However, the RSA government has introduced measures intended to benefit female entrepreneurs only. These government programmes include the topical Women Empowerment and Gender Equality Bills. These bills aim to re-distribute existing business opportunities to favour female entrepreneurs, focusing on enabling more females to create or seize opportunities (Tag & Wilson, 2013). According to Tag and Wilson (2013), however, gender-specific programmes and legislation designed to impose gender ratios in the entrepreneurial environment are unlikely to be the most effective means of encouraging total entrepreneurial start-ups in the country.
Much has been said about entrepreneurship as driver of economic progress and national prosperity (Scarbourogh, Wilson & Zimmer, 2009; Mukaj & Gratiela, 2013; Carland, Hoy, Boulton & Carland, 1984; Luiz & Mariotti, 2011). However social entrepreneurs are a different species in the genus ‘entrepreneur’. Not only do these entrepreneurs operate in non-profit organisations, they also approach the organisation in a radically different way and operate ventures which focus on the business of doing social and environmental good (Peredo & McLean, 2006; Hockerts, 2006; Mair & Marti, 2006).
The social entrepreneur combines a social mission with the approach of business-like discipline, innovation, and determination found in entrepreneurial business ventures (Dees, 2001; Tracey & Phillips, 2007; Catford, 1998; Leadbeater, 1997). Thus, social entrepreneurship is the attempt to draw upon proven business techniques and approaches to find solutions to social, cultural or environmental problems (Reis, 1999; Chell, 2007; Ho & Doyle Corner, 2010). Social entrepreneurs, like their commercial counterparts, have to recognise entrepreneurial opportunities intended explicitly to generate value to, and in, specific sectors of society. In order to achieve economic sustainability, social entrepreneurs, like their commercial counterparts, generate income from paying customers (Tracey & Phillips, 2007; Johnson, 2003). Thus, social entrepreneurs deal with economic issues like suppliers, barriers to entry, rivalry and operations on one side of the scale, and social issues on the other, while competing for customer business at the same time (Gras & Lumpkin, 2011; Oster, 1995).
In most areas of strategy formulation, social entrepreneurs might behave in a similar fashion to commercial entrepreneurs (Dacin, Dacin & Matear, 2010), but they might differ in some key areas. Gras and Lumpkin (2011) identify three external factors that both drive and limit the strategies that social business ventures pursue. Firstly, the stated goals are usually of a social nature and extend beyond the business venture to include the betterment of society (Murphy & Coombes, 2009; Tracey & Phillips, 2007). Secondly, resources are often more community based than internally based (Austin, Stevenson & Wei-Skillern, 2006). Thirdly, stakeholders are often outside the organisation and are often given considerable power, legitimacy and urgency in determining business strategy (Domenico, Tracey & Haugh, 2009).
The social entrepreneur introduces a profit motive into the running of a socially relevant organisation. This approach opens up avenues of funding and opportunities that are different from accessing equity and debt funding, to develop an income stream that brings in predictable, unrestricted income to these social organisations (Barendsen & Gardener, 2004). Additionally, the profit motive encourages a focus on quality service and product delivery, without which the organisation will have customers and, consequently, no income. Service delivery, in turn, is linked to accountability and transparency, creating a circle that builds trust, credibility and profits (Krige, 2015). The consequence of this approach is not a shift away from the mission of the organisation but, instead, a focus on it and this approach often introduces sources of income into the organisation that align with their work (Drayton, 2006; Shaw, 2004).
The economic decline in RSA is affecting many local communities adversely and the need for both economic and social regeneration exists in these areas. The funding of social programmes is largely dependent on grants and most of these grants, in all probability, cannot be sustained by government in the long run (Herrington, Kew & Kew, 2014). The fractured relationship between government and non-profit organisations (NPOs) in RSA adds to this problem. In most cases, the government subsidises rather than funds NPOs that deliver essential services in fields such as child protection, education, and health (Krige, 2015; Fowler, 2000). In the face of diminishing international aid and public funding and the government’s inability to deal efficiently with social problems, social entrepreneurship is emerging as an innovative approach to deal with complex social issues and needs (Johnson, 2000; Pillay, 2014; Thompson, Alvy & Lees, 2000).
Social entrepreneurship is not a magic solution that will eradicate the constraints that non-profit organisations experience in RSA, but it does offer the potential to shift civil society into a different way of doing things by creating a focus on long term sustainability, on quality service, efficiency and accountability (Frances, 2008; Thompson, Alvy, & Lees, 2000),. Social entrepreneurship blends the lessons from business with the diversity and complexity of social values and, in the mix, are great opportunities for change (Krige, 2015; Frances, 2008; Short, Moss & Lumpkin, 2009).