Research Article

Barriers to development of entrepreneurial ecosystems and economic performance in Southern Africa

DOI: 10.1080/20421338.2021.1918316
Author(s): Beverlley Madzikanda, People’s Republic of China, Cai Li, People’s Republic of China, Francis Tang Dabuo, People’s Republic of China

Abstract

Southern Africa has fewer innovative entrepreneurs per capita than other regions of Africa and a high failure rate amongst SMEs. Common problems such as corruption, crime and poverty plague the region, and as a result many of the economies do not perform well. The purpose of this paper is to investigate what barriers hinder the development of innovative entrepreneurship and economic performance in the region, based on entrepreneurial ecosystem theory. Panel data at national level was collected for eight countries in the region. Using SEM-PLS estimation, it was found that poor national strategies, corruption, excessive taxes, and high entry barriers put innovative entrepreneurship out of reach for many people. Government policies and the socio-cultural elements encourage entrepreneurship; however, the support is not enough to contribute positively towards economic growth. Unhealthy entrepreneurial ecosystems block access to resources and opportunities, limiting entrepreneurial activity and economic output. These findings highlight problem areas that can be used as the basis for policy formulation and restructuring efforts to target the most crucial barriers to innovative entrepreneurship, thereby encouraging entrepreneurial development. This study contributes towards the understanding of entrepreneurial ecosystem dynamics in the novel and unique context of middle- and low-income countries and can inform appropriate policy restructuring to ameliorate entrepreneurship in the region.

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