The moderating effect of mentorship on enterprise development in South Africa

Date
2018
Authors
Willemse, Ashwin Kennith
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Abstract
Enterprise development (ED) is concerned with helping entrepreneurs to grow their businesses. The business development process is dynamic with rapid technological and environmental change that occurs through the enterprise development life cycle. Business incubation programs play an integral part in the development of small and medium enterprises (SMEs). They offer support services, both financial and non-financial, of which mentorship is regarded as one of the key aspects of incubation programs. This study looked at SMEs across South Africa, operating in different industries to evaluate the impact of entrepreneurial orientation on SME growth and determine the moderating effect of mentorship on this relationship. The South African government, through its B-BBEE policies, has mandated corporates to implement ED programs as a way of aiding the growth of SMEs. The challenge faced by SMEs within the context of ED is discussed broadly in this study with recommendations put forth in an attempt to assist the successful implementation of ED. Entrepreneurial orientation (EO) is an established construct in entrepreneurship literature and its impact on growth is well researched. The three dimensions of innovativeness, proactiveness and risk-taking, as a unidimensional composite is used to assess the level of EO exhibited by the sample. This study however, expanded on the EO-Growth relationship to assess the role of mentorship within the context of ED in South Africa. Mentorship forms part of the developmental process of entrepreneurs and is well incorporated into the ED sphere. This study considered the role of the mentors as it relates to opportunity recognition. The study applied a quantitative method to analyse the relationship between the independent variable (EO) and the dependent variable business growth (BG), with mentorship being the moderating variable. The survey questionnaire was electronically distributed, producing a final number of 215 respondents as the empirical research sample. Growth, the dependent variable, was considered as a measure of success for SMEs. The measurement of SME growth focused on sales, assets, profit, annual turn-over and employment growth. The high failure rate of SMEs in SA is a cause of great concern to the government. This study provided empirical research, which further investigated the reasons attributed to government’s concerns. It further argued for certain interventions that can be of value to SMEs, government, ED practitioners, mentors and corporates. A regression analysis and bivariate correlation analysis was adopted to test the hypotheses, confirmatory factor analysis assessed the factorial validity of the constructs. Pearson’s test tested the significance of the correlations, visual tests (histograms) and descriptive statistics (skewness and kurtosis) assessed the normality of variables, before hypothesis testing was carried out, factor analysis determined the empirical analysis to confirm the theory, and to reduce dimensions of variables within constructs. In addition, the overall level of Cronbach reliability (0.68≤α≤0.89), and the corresponding EVA of close to 0.3, showed excellent reliability. The empirical findings of the study revealed that EO had a positive impact on SME growth and that the relationship between EO and growth was moderated by mentorship. As such, this study contributes to the theoretical discourse through its contribution to the existing body of literature. It further adds to literature concerned with the role of mentors in ED, and how this influences the growth of SMEs participating in ED programs. From a practical perspective, it provides recommendations to all stakeholders of ED in South Africa. Finally, this study provides ED practitioners, incubation managers, government policy makers, corporates, mentors, SMEs and entrepreneurs with relevant information to support their strategic planning and the implementation of enterprise development in South Africa.
Description
Thesis is submitted in partial fulfilment of the requirements for the degree of Master of Management specialising in Entrepreneurship and New Venture Creation to the Faculty of Commerce, Law and Management, Graduate School of Business Administration,University of the Witwatersrand, Johannesburg, 2018
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Citation
Willemse, Ashwin Kennith (2018) The moderating effect of mentorship on enterprise development in South Africa, University of the Witwatersrand, Johannesburg, <http://hdl.handle.net/10539/25928>
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