Towards a framework for a sustainable ecosystem for informal entrepreneurship in South Africa

Abstract

Low economic growth and high levels of unemployment and poverty have led many South Africans to engage in survivalist activities in the informal economy, including informal entrepreneurship. Entrepreneurship is viewed as a panacea for growth and development and developing countries like South Africa can benefit from growing informal entrepreneurship within a conducive ecosystem. Entrepreneurship ecosystems and informal entrepreneurship have been researched extensively, but separately. However, literature on informal entrepreneurship ecosystems (IEEs) is sparse and fragmented and is presently undocumented. Therefore, this research study aimed to join the pieces of the puzzle together in order to craft a framework that facilitates the creation of a sustainable IEE in South Africa. Using the interactive qualitative analysis (IQA) research methodology, this qualitative research derived knowledge on the South African informal entrepreneurship ecosystem from the perspective of two constituencies, using IQA focus groups representing each constituency. • Focus group 1 (informal entrepreneur constituency) comprised 15 informal traders from the eThekwini Municipality; and • Focus group 2 (subject matter expert constituency) comprised 7 individuals from academia, business and support organisations. Knowledge derived from the perspectives of these constituencies, who identified elements of the IEE system and relationships between these elements, is reflected in each constituency’s system. Structural, theoretical and inferential interpretations and analyses of these systems uncovered new knowledge and insights to create an IEE framework. This research introduced and defined the concept of an IEE and introduced the IEE framework containing eight dimensions, thus making a unique contribution to the extant body of literature on informal entrepreneurship and entrepreneurship ecosystems. This research contributes to cultivating informal entrepreneurship in South Africa by understanding the IEE, uncovering the deficiencies in the current IEE and making recommendations on how to strengthen the IEE. Using the IQA research methodology, this research enriches the understanding of IEEs and strengthens the IEE in South Africa by revealing the social realities of ecosystem agents through two underlying sub-systems supporting the IEE, namely the Macro-IEE containing distal factors and the Micro-IEE containing proximal factors. This research views government as a primary IEE change agent whose role is to enable informal entrepreneurship by co-creating and driving proximal and distal IEE policies; improving informal business regulations and the enforcement thereof; encouraging private sector and institutional involvement in the IEE; and providing IEE support and infrastructure.