The efficacy of government incentives in creating sustainable entrepreneurial growth in the agribusiness SMMEs entrepreneurial ecosystem in Botswana

Abstract

This study investigates the efficacy of government incentives in creating sustainable entrepreneurial growth in the agribusiness SMMEs entrepreneurial ecosystem in Botswana. The study uses a conceptual framework to organize divergent variables that influence growth into numerous coherent themes linked to SMMEs. As a cross- sectional and primarily empirical study, it draws data from a nationally representative sample of 600 owner/managers of agribusiness SMMEs who benefited from government incentives. Multivariate analysis techniques, namely SEM using SPSS and AMOS, analysed the relationships of variables relating to the statistical significance, causal and direct effects of various factors on sustainable entrepreneurial growth of agribusiness SMMEs.

Empirical evidence of this research, among many others, revealed that the majority of owner/managers (219) belonged to micro-companies, 129 belonged to small companies, 135 were from medium companies and lastly, 48 owner/managers were from large companies. Most of the agribusiness SMMEs surveyed had moved past that stage of start-up formalisation and had been operating for more than 2 years with a median firm age of 5 years. Despite a high youth unemployment rate in Botswana, in this empirical study the age category of 18 to 24 years was the smallest group of represented owner/managers of SMMEs in agribusiness value chains. The majority owner/managers of SMMEs were involved in rain-fed agriculture; and followed by owner/managers of SMMEs in cattle breeding. In addition, they were followed by those involved in agribusiness inputs, agribusiness services and others. Results from the inferential analysis suggest that SMME owner/managers of larger agribusinesses had a statistically significant, causal and direct effect on higher opinion on policy environment capital and infrastructural capital. The effect was more on the owner/manager’s counterparts who owned and managed smaller SMMEs. Size of company and type of business activity in the agribusiness value chain were dependent, such that certain types of agribusiness attracted more entrepreneurs due to their higher growth prospects. Agribusiness SMMEs that sought to exploit existing opportunities based on existing market knowledge showed more chances of attaining growth than those which sought to exploit opportunities based on new market knowledge. Regarding entrepreneurial orientation, owner/managers from larger agribusiness SMMEs were at variance with other agribusiness SMME owners over the statement that past entrepreneurial orientation helped to overcome barriers (roadblocks) in establishing their agribusiness SMMEs. Conversely, respondents from smaller agribusiness SMMEs were more likely to agree, as shown by the negative correlations. These empirical results confirm that increasing the degree of interdependency, interaction and interrelations among four key principal components of the entrepreneurial ecosystem and government incentives facilitates organisational birth and death cycles. Considering these results, certain policy implications are deduced. On this basis, the study recommends that academics, practitioners and policymakers converge their focus on four principal components, namely financial capital, social capital, policy environment and historical capital. These components would serve as indicators of government support for sustainable entrepreneurial growth of agribusiness SMMEs in a healthy ecosystem. An integrative entrepreneurial ecosystem model framework was developed to strengthen the contribution of new knowledge. The framework also proposed what needs to be done in order to create a healthy ecosystem. It thus increases the success rate of entrepreneurial ventures in an emerging market and enhancing implementation of long-term outcomes in sequence.