Globalization, entrepreneurial development and unemployment: a mediation analysis in the context of South Africa

Abstract

PurposeThis study clarifies the intricate nature of globalization's impact on unemployment rates in South Africa. Given the heterogeneous views on globalization's effect on economic development, this study aims to offer a nuanced perspective. Furthermore, it aims to explore the mediating role of entrepreneurial development in shaping the complex relationship between globalization and unemployment.Design/methodology/approachThe study employs four key indicators to measure entrepreneurial development, globalization and unemployment rates in South Africa. Hierarchical regression is used to evaluate the relationship between globalization and unemployment rates, and how entrepreneurial development mediates this relationship. Additionally, both the Sobel test and bootstrapping analyses were employed to verify and validate the mediating relationship.FindingsThe study demonstrates that globalization constitutes a crucial determinant of (un)employment rates in South Africa. The study shows that entrepreneurial development, specifically in the context of established business ownership, but not total early-stage entrepreneurial activity, exhibits an inverse relationship with unemployment rates. Moreover, it was observed that the positive impact of globalization on entrepreneurial development in South Africa becomes evident as SMEs advance to the established stage.Research limitations/implicationsThe study's concentration on South Africa constrains the applicability of the results to other nations.Practical implicationsBased on the findings of this study, it is essential for emerging economies, such as South Africa, to take measures to foster a robust entrepreneurial ecosystem that can aid in the growth and international competitiveness of young SMEs.Originality/valueTo the best of the authors' knowledge, this study represents the first endeavor to analyze the potential impact of entrepreneurial development, as measured by both nascent and mature SMEs, on the correlation between globalization and unemployment.