Effect of contextual factors on entrepreneurship success in South Africa: application of two-way analysis of variance design.

Abstract

The contributions of small businesses to growth and economic emancipation of developed and developing economies cannot be underestimated. Nonetheless, the 2019 publication of Global Entrepreneurship Monitor South Africa showed that the business discontinuance rate of 4.9% stood against the expected business ownership rate of 3.5% for the same year indicating that more businesses are been closed than continuity within the year under review. Furthermore, the report indicated that SMEs performed most of the businesses in 2019. This raises pertinent questions on the effects of capital and entrepreneurial skill on business performance. Thus, this article examines the effects of the twin contextual factors on the success of South African SMEs using Analysis of Variance technique (two-way design). Findings suggest the absence of a significant variance in the influence of Capital-Startup on Entrepreneurship Success for different levels of Entrepreneurship Skills. In-addition, results suggest, that there is a difference in Entrepreneurship Success scores for different levels of Capital-Startup and Entrepreneurship Skills, when the later and former are combined. Expanding finance opportunities available to SMEs should be a primary focus for policy makers in developing countries. This will foster the development and sustainability of SMEs. Furthermore, improving and leveraging SME skills should form part of a strategic vision supporting SMEs.