UNDERSTANDING THE INTERNAL AND EXTERNAL CONSTRAINTS TO GROWTH OF MICROENTERPRISE ENTREPRENEURSHIP IN A SOUTH AFRICAN PROVINCIAL CONTEXT: A CASE OF MPUMALANGA-MKHONDO

Darma Mahadea () and Samukelisiwe Khumalo
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Darma Mahadea: School of Economics and Finance, Pietermaritzburg Campus, University of Kwazulu-Natal (UKZN), South Africa
Samukelisiwe Khumalo: School of Economics and Finance, Pietermaritzburg Campus, University of Kwazulu-Natal (UKZN), South Africa

Journal of Developmental Entrepreneurship (JDE), 2020, vol. 25, issue 02, 1-24

Abstract: Although post-apartheid South Africa has introduced various policies and institutions to support small and micro businesses, these efforts have not delivered expected results; many such firms are not growing and are failing. Hence, this study investigates the constraints holding back the development of micro ventures and recommends what can be done to assist them. It is based on a sample of microenterprise informal sector operators in the South African province of Mpumalanga. Using Principal Component Analysis (PCA), a set of fourteen external and another of fifteen internal environmental constraints on growth were examined. The results indicate each set explains almost two-thirds of the total variation in growth limitations, with growth as an integrated component of sale, asset, labor and profit. The regression analyses confirmed that internal factors were significantly heavier hurdles in limiting the growth of the microenterprise operators than the external ones. The internal constraints were ‘education and training,’ ‘entrepreneurial factors’ and ‘storage and infrastructure,’ and the external constraints related to market factors. Because the external constraint is mainly exogenous, more efforts have to be placed on addressing internal entrepreneurial limitations for microenterprise to experience growth.

Keywords: Constraints; informal sector; microenterprise; growth performance (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1142/S1084946720500132

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