Principal Topic

In a developing economy such as post-apartheid South Africa, entrepreneurship has been identified as a principle vehicle for bringing historically disadvantaged citizens into the economic mainstream and creating sustainable growth. Yet, polarized attitudes toward capitalist enterprises among the black community, especially those residing in the townships, compound the challenges of venture start-up. Unlike the individualistic competitive patterns of a Western heritage, this community has a more communal orientation. Yet, such an orientation may also facilitate the creation and usage of networks.

This research investigates networks used by South African black entrepreneurs in the process of venture creation. It is guided by a conceptual model in which key dimensions of the entrepreneur’s network structure are identified and linked to antecedent variables reflecting the entrepreneur’s background and venture triggering events, and to outcome variables reflecting the operational sophistication of the enterprise, and the entrepreneur’s future growth outlook.

Method

This exploratory investigation involves the collection of data from a convenience sample of black entrepreneurs in the Gugulethu and Khayelitsha townships surrounding Cape Town, South Africa. These areas were selected due to their increasing populations, high unemployment (>50%), and needs for economic development. Seven entrepreneurs were interviewed at their location of business using a structured interview protocol. Both qualitative and quantitative descriptive and sociometric data were collected. A Quadrant Network Modeling Framework is used to illustrate key network relationships for each entrepreneur, including advice, customer, financial resource and non-financial resource relationships. Networks are characterized in terms of structure, accessibility, frequency of communication, trust and member value. Data analysis examines linkages between network development and the antecedent and outcome variables.

Implications

The current project contributes to the entrepreneurship and network literatures by examining the nature of networks relied upon by entrepreneurs under adverse conditions.  Results illustrate the importance of network characteristics for understanding firm operational sophistication, and the entrepreneurs’ future outlook. Scholars and practitioners benefit from the project’s focus on finding meaningful ways to assist entrepreneurs operating under conditions and within cultures not typically supportive of entrepreneurship. They will gain a better appreciation for the network characteristics and designs that are associated with sustainable growth.