The correlation between entrepreneurship and economic development : towards a framework for optimising its contribution to the economic development of South Africa

Abstract

This study sought to establish the correlation between entrepreneurship and the economic development of South Africa. The study employed a pragmatism paradigm, and adopted a mixed-methods approach and a descriptive mixed method design. The population comprised 358 entrepreneurship experts drawn from Johannesburg Stock Exchange-listed companies, and 111 economic development experts drawn from academic institutions in Gauteng, a province of South Africa. Cluster sampling and census were adopted as the sampling approaches. Quantitative and qualitative data were solicited through an embedded questionnaire comprising both closed and open-ended questions. A total of 350 questionnaires were distributed and 273 were completed and returned, giving a 78% response rate. Descriptive and inferential statistics were used to analyse the quantitative data by utilising the Statistical Analysis Software. Spearman’s rho correlation analysis was conducted to determine the significant correlation between entrepreneurship and economic development dimensions. Due to multivariate relationships between entrepreneurship and economic variables, the study also adopted inferential multivariate analysis to determine the statistically significant relationships among these variables. Thematic analysis provided an interpretation of qualitative data pertaining to the optimisation of the entrepreneurship policy framework and its implementation in South Africa. The study established a fragmented mutual determinant relationship between entrepreneurship and economic development in South Africa. The study also revealed that opportunity and necessity entrepreneurship, the elements of economic development, entrepreneurial policy framework conditions, and elements of the entrepreneurship policy framework, are crucial for improving the mutual determinant relationship between entrepreneurship and the economic development of South Africa. The study concluded that there is a fragmented mutual determinant relationship between entrepreneurship and the economic development in South Africa. Further conclusions were that opportunity as well as necessity entrepreneurship, elements of economic development, entrepreneurial policy framework conditions, and elements of the entrepreneurship policy framework play a crucial role for entrepreneurship to contribute significantly to the economic development of South Africa. Based on these conclusions, a number of recommendations are made. There should be a combination of some of the opportunity and necessity entrepreneurship determinants for entrepreneurship to significantly contribute to the South African economic development. In order to improve the entrepreneurial policy framework conditions of South Africa, certain provisions are required. Firstly, goods and services markets should be expanded; industrialisation, technology and economies of scale should be promoted. Secondly, policies where business incubators are mandated to assess the level of entrepreneurial skills of individuals before providing them with the funding are necessary. These policies should also promote business sophistication in the economy. Thirdly, there should be an improvement in the efficiency of public institutions to ensure effective implementation of structural reforms and African research methodologies. Fourthly, the South African government should focus on improving human capital through practical entrepreneurship education and skills training, and creating a more enabling environment that removes negative perceptions about entrepreneurship. Government should also ease the bureaucracy that hampers entrepreneurship.

Based on the findings and extensive literature review, the contribution of the current study to scholarship is the framework that was developed. This framework is meant to optimise the contribution of entrepreneurship to the economic development of South Africa. This particular research only focused on determining the correlation between entrepreneurship and the economic development of South Africa. Further studies could be conducted on financial support as a determinant of the correlation between entrepreneurship and the economic development of South Africa, and the correlation between entrepreneurship and the economic development in other African countries.