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A targeted approach to informal business development: the entrepreneurial route

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  • Andre Ligthelm

Abstract

The present paper maintains that initiatives to promote and support small businesses need to focus on those with growth potential rather than on the small business sector as a whole, and that the human factor, especially entrepreneurial intentions and behaviour, is the overwhelming force in small business success. Empirical evidence shows that many entrepreneurs setting up businesses in the informal economy of South Africa have little business acumen. The majority of informal businesses operate as survivalist entities with limited development and growth potential. The paper suggests that only between 10 and 15 per cent of informal entrepreneurs have sufficient business skills to expand and develop their businesses. These should be the focus of policy initiatives. Separate collective support measures should be designed to make the business environment more hospitable to low-potential informal businesses.

Suggested Citation

  • Andre Ligthelm, 2008. "A targeted approach to informal business development: the entrepreneurial route," Development Southern Africa, Taylor & Francis Journals, vol. 25(4), pages 367-382.
    • Handle: RePEc:taf:deveza:v:25:y:2008:i:4:p:367-382
    DOI: 10.1080/03768350802316138
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    Cited by:

    1. Folashade Akinyemi & Kalu Ojah, 2018. "Transition Probabilities Between Entrepreneurship Phases In Africa’S Emerging Economies: The Case Of Nigeria And South Africa," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 23(03), pages 1-20, September.
    2. dos Santos, José & Duffett, Rodney, 2021. "Exploring social media usage as a communication channel among independent food retailer SMEs in South Africa," Small Business International Review, Asociación Española de Contabilidad y Administración de Empresas - AECA, vol. 5(2), pages 392-392, September.
    3. Eunice Maria M. N. Dos Santos & João J. Ferreira, 2017. "Analyzing Informal Entrepreneurship: A Bibliometric Survey," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 22(04), pages 1-20, December.
    4. Maisa Y. Burbar & Suzan J. Shkukani, 2021. "An Exploration of Determinants of Entrepreneurial Characteristics, Motivation, and Challenges in Palestine," International Business Research, Canadian Center of Science and Education, vol. 14(9), pages 1-53, September.
    5. Imraan Valodia & Richard Devey, 2012. "The Informal Economy in South Africa: Debates, Issues and Policies," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 6(2), pages 133-157, May.

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