A study measuring the relationship between informal sector entrepreneurial activity and firm performance

Abstract

T he in f orm a l secto r , whi ch i s one of the m a jo r d r i ve r s of the c ount r y ’ s eco nomy i s not pe r f orm in g t o i t s f u l l poten t ia l ( W ebb, Bu r t on, T ihan y i and I re land 2013 ; L ekhan ya 2015 ) . En t r epr eneu rsh ip , cu r rent l y th e m a jo r se gm ent of the in f o rm a l s ect or i s no t f l o ur i s h in g a s en v i sa ged. T h i s s tud y sough t to e xp lo re i nf orm a l se cto r ent rep ren eu r ia l a ct i v i t ie s / bu s in es s o wne rs h ip wi th th e hope of recom m end in g wa ys in whi ch the se cto r can be enha nced . T he stu d y in ve st iga ted whe the r cu l tu re of en t re pre neu rsh ip , a cce ss to f inan ce, ent rep ren eu r ia l edu cat ion / s k i l l s and go ve rnm en t suppo r t p red i ct f i rm pe r f orm an ce ( f inan c i a l and subj ec t i ve ) .

T he stud y ad op ted a qua nt i tat i ve app roa ch . D ata wa s co l l ect ed f rom a pu rpo s i ve s am pl e b y m ean s of a s e l f - adm in i ste red que st ionna i re and was an a l ysed th rou gh Pea rson co r re la t ion and s im p le l inea r r e gres s ion ( SL R ) . T he f in d in gs of th i s s tud y af ter dat a ana l yses h i gh l i ghted ke y a rea s th at re qu i re in t er vent ion .

T he s tud y f ound tha t the adop t io n of an ent rep reneur sh ip cu l tu re , and e nt rep reneu r ia l edu cat ion and s k i l l s, s i gn i f i cant l y pr edi ct s the f i rm ’ s f ina nc ia l and sub je ct i ve pe r f orm an ce. Fu r th er m o re , i t wa s f ound th at go ve rnm ent and in cubat ion sup por t p red i c t a f i rm ’ s f inan c ia l p erf o rman ce. Ho we ve r , i t was a l s o estab l i she d that go ve rnm ent an d i nc u bat ion suppor t ha d no un i que cont r ibut ion to wa rd s non - f inan c ia l p erf o rm ance of the f i rm . T he stud y f urt her e stab l i shed tha t a cce ss to f i nance has no un i que cont r ibut ion to wa rd s f inan c ia l and non - f inan c i a l pe r f orm an ce of the f i rm .

W i th the abo ve f ind in gs, i f ent rep reneu r s a re to f l our i sh, a l l s oc ie ta l f acet s ha ve ro le s to p la y t o im pro ve the en t re pre neu r i a l en v i ro nm ent . F i rm o wne r s/ m ana ge r s a re ad v i sed to pu rs ue en t re pre neu r i a l / bu s in es s educ at ion f or them to ef f ecti ve l y m ana ge th e i r f i rm s. Mo reo ve r , the go ve rnm ent and f inanc ia l in st i tut ion s s hou ld wo rk to ge the r in im p ro v i n g f inan c ia l opt ion s f or sm a l l , m i c ro and m edi um ente rp r i se s ( S M MEs ) . F or the Sou th Af r i c an go ve rnm ent to i m pr o ve en t re preneu r ia l ac t i v i t ie s i t shou ld ef f ecti ve l y d i s sem inat e in f orm at ion abou t i t s p ro gram m es to the pub l i c t o ensu re th at both in f orm a l and f orm a l ent rep rene ur s a re we l l in f o rm ed.