In Search of Black Entrepreneurship: Why Is There a Lack of Entrepreneurial Activity Among the Black Population in South Africa?

Abstract

Compared to other ethnic groups, the black population of South Africa has a low participation rate in entrepreneurship activities. The research question of this article is to explain this empirical fact. Based on twenty-four expert interviews, five patterns of explanation are presented and elaborated: a historical apartheid explanation, a financial resources explanation, a human capital explanation, a traits and mindset explanation and a social capital and network explanation. The historical apartheid explanation cannot be qualified independently of the other explanations as a distinctive explanation of its own. Although missing financial resources and shortages of human capital are the factors most often mentioned by the experts, and probably the most important ones, the remaining two explanations (mindset and social network) also deserve attention. A point argued in the conclusion of this article is that socio-cultural values, and the concept of "social capital" in particular, merit further investigation with respect to the question of why there is a lack of black entrepreneurship in South Africa.

Entrepreneurship traits of Science, Engineering and Technology (SET) students

“…It indicates an external locus of control where the respondent doubts personal qualities and efforts to achieve goals in life and rather believes in fate (Caird, 2014). Preisendörfer et al (2012) also found that the black student groups tend to avoid risks due to, for example, fear of failure. On the other hand, the black student groups had a higher tendency for the subfield "need for achievement" in relation to the white student groups (p <0.1).…”

“…Mueller and Thomas (2001) indicate that there is a link between willingness to take risks and internal locus of control. Other authors, such as Preisendörfer et al (2012), have also found that black student groups have a lower level of self-confidence, which relates to the subfield "locus of control". It indicates an external locus of control where the respondent doubts personal qualities and efforts to achieve goals in life and rather believes in fate (Caird, 2014).…”

“…Antonites and Govindasamy (2013) conducted a study on the critical success factors of Indian entrepreneurs. Preisendörfer, Bitz and Bezuidenhout (2012) found a vast difference in the total early-stage entrepreneurial activity (TEA) rates of the four ethnic groups in South Africa with lower rates for black and coloured South Africans (4.3% and 2.9% respectively) when compared to the rates of 13.2% for the white and 16.1% for the Indian student groups. As the black population is the largest group in South Africa at 79.2% of the population according to Census 2011(StatsSA, 2012, it affects the country's weak overall TEA performance.…”

“…Mueller and Thomas (2001) have shown that there is a link between the willingness to take risks and internal locus of control. In their study, Preisendörfer et al (2012) showed that black student groups have a low level of self-confidence and a tendency to avoid risks, which includes a high fear of failure.…”

Challenges facing international projects for entrepreneurial development in South Africa

“…The postapartheid government prioritised the development of SMEs through policies aimed at fostering entrepreneurship (Bradford, 2007). From 2000 to 2009, the number of registered businesses increased from 107 886 to over 255 383, and more than 63.6% of the new businesses were created by black people, who comprise 80% of the population (Preisendorfer et al, 2012). Several government institutions support entrepreneurial development, including the Small Enterprise Development Agency, the Small Enterprise Finance Agency, the National Empowerment Fund, the Industrial Development Corporation, the National Youth Development Agency, the Land Bank, and the Micro Agricultural Financial Institutions of South Africa (MAFISA).…”