Effectuation methods in the success of entrepreneurs securing funding in the dtic Black Industrialist Scheme

Abstract

This study investigates the role of effectuation methods in the success of Black Industrialists securing funding through the Department of Trade, Industry, and Competition (dtic) Black Industrialist Scheme (BIS) in South Africa. The study is situated within the broader discussion on entrepreneurial strategies and economic empowerment in South Africa. Drawing on Sarasvathy's (2001) effectuation theory, the research examines five core principles: Bird in Hand, Affordable Loss, Lemonade, Crazy Quilt, and Pilot-in-the-Plane. It explores how these principles influence the ability of Black Industrialists to navigate the complex funding environment and secure financial resources. Using a quantitative research design, data was collected from Black Industrialists who have applied for funding under the BIS. The research employs Likert-scale questionnaires to measure the application of effectuation principles and their correlation with successful funding outcomes. The study also considers entrepreneurial experience as a moderating variable, acknowledging its potential impact on decision-making processes and funding success. The findings indicate that while effectuation principles are valuable in entrepreneurial contexts, their effectiveness is limited within the framework of the BIS. Specifically, the Bird in Hand and Crazy Quilt principles, which emphasize leveraging existing resources and forming strategic partnerships, demonstrate a significant positive correlation with successful funding outcomes. However, entrepreneurial experience did not significantly moderate these relationships, challenging previous assumptions about its role in enhancing effectuation strategies. This study contributes to both theoretical and practical understanding of effectuation and funding in emerging economies. It suggests that while effectuation offers a useful framework for entrepreneurial decision-making, its practical application must align with institutional funding requirements. The study recommends that policymakers consider more adaptive funding mechanisms to accommodate entrepreneurial flexibility while maintaining accountability. Future research should explore longitudinal effects of effectuation strategies and comparative analyses across diverse funding mechanisms to deepen insights into entrepreneurial success in structured financial environments.