Factors influencing informal business choice in historically black South African townships.
Date
2014-08-01
Authors
Motshwane, Tebogo Seith.
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Abstract
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There has been a significant change in the competitive forces and the economic climate that exists in historically black South African townships. The lifestyles and spending patterns of the communities that reside in those areas are completely different from what they were a decade ago. After all these changes, one may expect to see so many small informal businesses still being established in these areas. This study investigates the main factors that make small informal businesses popular among entrepreneurs in historically black South African townships.
Small business owners operating within the townships of Atteridgeville and Mamelodi, were approached to participate in the research by completing paper-based questionnaires. The key findings from the research questions posed by this study were that an entrepreneur’s choice of type business to establish was influenced by the entrepreneur’s demographics. It was also found that an entrepreneur’s choice was influenced by some aspects of the entrepreneur’s level of access to finance, and that the lifespan of a small business was related to the characteristics of that particular business.
The overall results of the study found that formal businesses tended to receive better access to resources and support structures, than informal businesses. This makes formal businesses more sustainable and profitable, which means that formal businesses are better positioned for growth, and stand a greater chance of improving their owners’ living standards. When making the decision to establish a business, entrepreneurs in historically Black Township areas should explore a wider range of the different business type options available to them. They should consider establishing businesses that have better access to resources and support structures, so that they stand a better chance of being profitable and sustainable.
Description
MBA 2014
Keywords
Factors influencing informal business choice in historically Black South African townships.