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A Critical Analysis of Small Businesses in Gauteng Before and After the B-Bbee Intervention

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A Critical Analysis of Small Businesses in Gauteng Before and After the B-Bbee Intervention A CRITICAL ANALYSIS OF SMALL BUSINESSES IN GAUTENG BEFORE AND AFTER THE B-BBEE INTERVENTION Rudolph Cornelius Jacobus Bezuidenhout Student number: 72281635 Submitted in fulfilment of the requirements for the degree PHD ENTREPRENEURSHIP IN THE FACULTY OF ECONOMIC AND MANAGEMENT SCIENCES AT THE UNIVERSITY OF PRETORIA Supervisor Professor J.J. van Vuuren September 2018 i DECLARATION I, RCJ Bezuidenhout hereby declare that the work on which this dissertation is based is my original work (except where acknowledgements indicate otherwise) and that neither the whole work nor any part of it has been, is being, or is to be submitted for another degree in this or any other university. I empower the university to reproduce for research either the whole or any portion of the contents in any manner whatsoever. Signature: … Date: 23 November 2017 ……………………………………. ii ACKNOWLEDGEMENTS First of all, my praise and glory to my Creator, without whom this study would not have been possible and to whom I am forever grateful for giving me the opportunity to accomplish this goal. My sincere gratitude and appreciation to: Professor Jurie van Vuuren for his encouragement, insight and inspiration. It was a real honor and privilege to be one of his students. Dr E Marx, for literature research and her valuable contribution to the success of the study. Ms Joyce Jordaan of the Department of Statistics at the University of Pretoria for the statistical work and analysis of the data for this study. Associate Professor Henriette van Rensburg for her constructive guidance and advice. Mr Theo Schoeman, CEO of Centurion Academy, for his support to continue my studies, and allowing time for appointments with study leaders and SMME owners. Mrs W Uys, Academic Director, Centurion Academy, who believed in me. Johan Ueckermann who time and again came to my rescue with IT problems. My family and friends My dearest wife, Lulu, who gave me her unconditional love and support, who provided me with opportunities to study. To my late mother for believing in my abilities and her prayers. iii ABBREVIATIONS ANC African National Congress B-BBEE Act Broad-Based Black Economic Empowerment Act 53/2003 BEE Black Economic Empowerment BeeCom Black Economic Empowerment Commission DTI Department of Trade and Industry GDP Gross Domestic Product GEAR Growth, Employment and Redistribution NGO Non-Governmental Organisation RDP Reconstruction and Development Programme SETA Sector Education and Training Authority SMME’s Small, Medium and Micro Enterprises Key terms: Broad-Based Black Economic Empowerment, Empowerment, Small, Medium and Micro Enterprises, interventions, entrepreneur, entrepreneurial skills, enterprise development, unemployment, economic growth. iv TABLE OF CONTENTS ACKNOWLEDGEMENTS .......................................................................................... ii ABBREVIATIONS..................................................................................................... iii TABLE OF CONTENTS ............................................................................................ iv CHAPTER 1 INTRODUCTION .................................................................................. 1 1.1 Introduction ....................................................................................................... 1 1.2 Background ...................................................................................................... 2 1.3 Rationale for the study...................................................................................... 5 1.4 The research question ...................................................................................... 7 1.5 Objectives of the study ..................................................................................... 8 1.6 Scope of the study ............................................................................................ 9 1.7 Research methodology ................................................................................... 10 1.8 Outline of the study ........................................................................................ 12 1.9 Conclusion ...................................................................................................... 17 CHAPTER 2 THEORIES OF ENTREPRENEURSHIP, SMALL BUSINESSES AND THE ENTREPRENEURIAL PROCESS ................................................................... 19 2.1 Introduction ..................................................................................................... 19 2.2 The theory of entrepreneurship ...................................................................... 19 2.2.1 Economic theories of entrepreneurship ................................................... 19 2.2.2 Psychological theories of entrepreneurship ............................................. 20 2.2.3 Sociological / anthropological theories ..................................................... 21 2.2.4 Opportunity-based theory ........................................................................ 22 2.2.5 Cultural theory of entrepreneurship .......................................................... 22 2.2.6 The theory of locus of control ................................................................... 23 v 2.2.7 The resource-based theory ...................................................................... 24 2.2.8 Summary ................................................................................................. 24 2.3 Theory of small businesses ............................................................................ 25 2.3.1 The gambler’s ruin theory ........................................................................ 25 2.3.2 The theory of small business performance .............................................. 25 2.4 The entrepreneurial process theories ............................................................. 26 2.4.1 Stakeholder theory ................................................................................... 26 2.5 Conclusion ...................................................................................................... 27 CHAPTER 3 THE HISTORICAL DEVELOPMENT OF SOUTH AFRICA, ITS POLITICS AND ECONOMY .................................................................................... 28 3.1 Introduction ..................................................................................................... 28 3.2 The historical development and economic background of South Africa ......... 28 3.3 A brief history of South Africa’s politics and economy before 1994 ................ 29 3.4 Impact on the South African economy ............................................................ 32 3.5 The political and economic position of a post-apartheid South Africa ............ 35 3.6 Conclusion ...................................................................................................... 40 CHAPTER 4 ENTERPRISE DEVELOPMENT, DEFINITIONS AND CHARACTERISTICS OF AN ENTREPRENEUR .................................................... 42 4.1 Introduction ..................................................................................................... 42 4.2 Enterprise development .................................................................................. 42 4.3 Definitions and characteristics of an entrepreneur ......................................... 48 4.3.1 Definitions of an Entrepreneur ................................................................. 48 4.3.2 Characteristics of an entrepreneur ............................................................ 52 4.4 Conclusion ...................................................................................................... 54 vi CHAPTER 5 THE IMPORTANCE OF SMME’S ....................................................... 55 5.1 Introduction ..................................................................................................... 55 5.2 Definition of and criteria for a small business ................................................. 56 5.3 The role of small businesses in an economy .................................................. 61 5.4 Economic growth and unemployment............................................................. 66 5.4.1 Economic growth ..................................................................................... 66 5.4.2 Unemployment ......................................................................................... 70 5.5 Conclusion ...................................................................................................... 74 CHAPTER 6 Broad–Based Black Economic Empowerment in South Africa .... 76 6.1 Introduction...................................................................................................... 76 6.2 Interventions in other countries ....................................................................... 77 6.3 Interventions in South Africa............................................................................ 82 6.4 The origin and emergence of Broad-Based Black Economic Empowerment .. 84 6.5 Broad-Based Black Economic Empowerment Act (No.53 of 2003) ................. 86 6.6 The components and weighted elements of the generic B-BBEE scorecard .. 89 6.7 Conclusion ...................................................................................................... 96 CHAPTER 7 OVERVIEW OF THE EMPIRICAL STUDY ......................................... 97 7.1 Introduction.....................................................................................................
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