The viability of informal micro businesses in South Africa: a longitudinal analysis (2007-2011)

Abstract

A five year longitudinal study (2007 to 2011) was conducted among a panel of informal micro businesses in the informal sector of South Africa. The study was aimed at examining micro business survival and attrition. A life-cycle analysis confirmed the survival of only 43.2% of these businesses in an increasing competitive environment over a period of five years. By contrasting the profiles of surviving businesses with those that closed their doors, a second objective was also attained, namely the identification of principle reasons for micro business survival. According to a categorical regression model with business survival as dependent variable, the human factor and, especially the entrepreneurial endowment and small business management skills materialised as the strongest predictors of micro business sustainability. Micro business support strategies, especially in developing societies with limited resources, should be focused on businesses with embedded entrepreneurial acumen. Hence the inherent dynamics to create and exploit new innovative business opportunities.