Cultural Understandings and Lived Realities of Entrepreneurship
in Post-Apartheid South Africa
by
Melissa Beresford
A Dissertation Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy
Approved September 2018 by the Graduate Supervisory Committee:
Amber Wutich, Chair H. Russell Bernard Takeyuki Tsuda Abigail York
ARIZONA STATE UNIVERSITY
December 2018 ABSTRACT
This dissertation examines cultural understandings and lived realities of entrepreneurship across South Africa’s economic landscape, comparing the experiences of Cape Town’s Black entrepreneurs in under-resourced townships to those of White entrepreneurs in the wealthy, high finance business district. Based on 13 months of participant observation and interviews with 60 entrepreneurs, I find major differences between these groups of entrepreneurs, which I explain in three independent analyses that together form this dissertation. The first analysis examines the entrepreneurial motivations of Black entrepreneurs in Khayelitsha, Cape Town’s largest township. This analysis gives insight into expressed cultural values of entrepreneurship beyond a priori neoliberal analytical frameworks. The second analysis compares the material resources that Black entrepreneurs in Khayelitsha and White entrepreneurs in downtown Cape
Town require for their businesses, and the mechanisms through which they secure these resources. This analysis demonstrates how historical structures of economic inequality affect entrepreneurial strategies. The third analysis assesses the non-material obstacles and challenges that both Black entrepreneurs in Khayelitsha and White entrepreneurs in wealthy areas of downtown Cape Town face in initiating their business ventures. This analysis highlights the importance of cultural capital to entrepreneurship and explains how non-material obstacles differ for entrepreneurs in different positions of societal power. Taken together, my findings contribute to two long-established lines of anthropological scholarship on entrepreneurship: (1) the moral values and understandings of entrepreneurship, and (2) the strategies and practices of entrepreneurship. I demonstrate the need to expand anthropological understandings of entrepreneurship to
i better theorize diverse economies, localized understandings and values of entrepreneurship, and the relationship of entrepreneurship to notions of economic justice.
Yet, through comparative analysis I also demonstrate that diverse and localized values of entrepreneurship must be considered within the context of societal power structures; such context allows scholars to assess if and how diverse entrepreneurial values have the potential to make broad-scale social and/or cultural change. As such, I argue for the importance of putting these two streams of anthropological research into conversation with one another in order to gain a more holistic understanding of the relationship between the cultural meanings and the practices of entrepreneurship.
ii DEDICATION
For my family.
To my parents, Ken and Susan Baldwin. Thank you for your unyielding love and support.
I would not be here without you.
To Graeme and Tiffany. Thank you for keeping me in the moment and reminding me
what is truly important.
To Ben. Words cannot express my gratitude for having you as my partner in this journey.
To Isla and Quinn. You were with me through every step of the research and writing for
this dissertation. I do this for you, in the hopes that my scholarship will help make the
world a better place for you and yours.
iii ACKNOWLEDGMENTS
This dissertation would not have been possible without the help and support of a number of people. Their contributions, large and small, have shaped not only the course of this research, but also my own intellectual and emotional growth. I give all of you my heartfelt thanks.
At Arizona State University, Dr. Amber Wutich, my chair and mentor, has worked tirelessly to teach, support, and believe in me, even when I did not believe in myself. She has pushed me when I needed pushing and caught me when I needed catching. She has instilled in me not only the necessary skills for rigorous, careful, and ethical social science research, but also the requisite flexibility and resilience to keep pushing forward.
My committee members, Dr. H. Russell Bernard, Dr. Takeyuki Tsuda, and Dr.
Abigail York, have also each contributed enormously to this project. Their penetrating questions and insightful feedback every step of the way have made this dissertation a better piece of scholarship and me a better scholar.
At ASU, I have also benefited from the mentorship and support of Dr. Alexandra
Brewis and Dr. Alissa Ruth. Without their advice and guidance at crucial moments in my career, I would not be where I am today, and this dissertation would certainly not have been possible. I would also like to thank my network of friends and peers in the Culture,
Health, and Environment Lab who provided companionship, laughter, and doughnuts in times of need.
iv In South Africa, I would first like to thank all of the entrepreneurs who generously gave me their very valuable time in order to contribute to my research. It was an honor and a pleasure to work alongside you and get to know each of your stories. I would especially like to thank Pug Roux, Nicole Chalkley, Chris Vermeulen, Michal
Szymanski, Peggy Mpahlwa, and Lesedi Kgaka, who each provided insights and assistance that were crucial to development of this project and the execution of my fieldwork. I am also grateful for the research funds provided by the National Science
Foundation, the Social Science Research Council and Andrew W. Mellon Foundation, the
School of Human Evolution and Social Change, and the Graduate College at ASU.
During my stay in South Africa, Debby and Neil van Zyl provided a warm and supportive home base. They went the extra mile for two strangers from the other side of the world, and it was a pleasure and an honor to share their home. My South African family also supported me in countless ways – materially, emotionally, spiritually. Kim
De Villiers ensured that I could get around town. Allison Porter made sure I stayed grounded a whole. Jane Porter ensured my physical and emotional safety. Heidi Vorster always knew when to call and check in. Alex Proctor kept me on my toes and laughing.
Allister and Stacey Mowbray provided countless meals and glasses of wine along with loving companionship.
Finally, I give my eternal thanks to my family and support network in California and Minnesota. To Ben, Mom and Dad, Rick and Mary, Graeme and Tiffany, Grahame and Kati, Gesine and Chris, Kerstin and Adam, Andrea and Eric, Claire and Harvey,
Amy and Beck, and Liz and Steve – you have all supported me during the times I have needed it the most. Thank you.
v TABLE OF CONTENTS
CHAPTER Page
1 INTRODUCTION ...... 1
Theoretical Approaches to Entrepreneurship ...... 3
Research Objectives...... 9
Dissertation Format and Organization ...... 12
References ...... 13
2 ENTREPRENEURSHIP AS LEGACY BUILDING: RE-IMAGINING CAPITALISM
IN POST-APARTHEID SOUTH AFRICA ...... 18
Introduction ...... 19
Anthropology, Capitalism and the Economic Imaginary ...... 21
Entrepreneurship: Reproducers of Neoliberal Capitalism, or Agents of
Economic Change? ...... 23
Econoimc Insiders and Outsiders: South Africa’s Distributional Regime
...... 25
Personhood, Dependency, and Economic Opportunity in South African
Townships ...... 27
The New Khayelitsha Entrepreneurs ...... 30
Research Methods ...... 31
“Mummy built and empire for us”: Entrepreneurship as Legacy Building
...... 33
vi CHAPTER Page
Conclusion: Legacy Building and Re-imagining Capitalism in a Post-
Apartheid Economy ...... 45
References ...... 49
3 RE-THINKING ENTREPRENEURSHIP THROUGH DISTRIBUTION: NON-
MARKET RELATIONS AND INEQUALITY AMONG SOUTH AFRICAN
ENTREPRENEURS ...... 54
Introduction ...... 55
From Productive Labor to Distributive Mechanisms of Support: Re-thinking
the Base of Entrepreneurship ...... 58
Entrepreneurship as Economic Development Policy in South Africa ... 62
Distributive Livelihoods in South Africa: Survival, Entrepreneurship, and
Traditional Forms of Social Support ...... 66
Research Methods ...... 68
Family Networks and Distributive Relations in a Post-Colonial, Post-
Apartheid Economy ...... 70
Conclusion: Distributive Relations, Entrepreneurship, and the
Perpetuationof Economic Inequality ...... 84
References ...... 88
vii CHAPTER Page
4 CULTURAL CAPITAL AND THE REPRODUCTION OF ENTREPRENEURIAL
INEQUALITY: COMPARATIVE EVIDENCE FROM CAPE TOWN, SOUTH
AFRICA ...... 92
Introduction ...... 93
Theoretical Review ...... 96
Research Setting ...... 101
Research Methods ...... 104
Findings ...... 107
Discussion ...... 120
Conclusion ...... 123
References ...... 125
5 CONCLUSION: SUMMARY, SYNTHESIS, AND FUTURE DIRECTIONS ...... 131
Summary of Findings...... 132
Synthesis of Theoretical Contributions ...... 135
Broader Impacts ...... 139
Limitations and Future Research Directions...... 140
Conclusion ...... 141
References ...... 143
REFERENCES ...... 148
viii CHAPTER Page
BIOGRAPHICAL SKETCH ...... 163
ix CHAPTER 1
INTRODUCTION
Lufefe Nomjana started with $3 and “a big idea.” At 28 years old, Lufefe was like many young Black South African men: unemployed and desperately seeking not only employment, but also a path to upward socioeconomic mobility. Living in a shack in
Cape Town’s Khayelitsha township with his girlfriend, he had few resources to start a business, but he wanted to help address the growing diabetes epidemic in South Africa’s
Black population by making healthy food more available in his community. His plan was to sell bread he made from spinach. In 2011 he used his neighbor’s oven to bake 24 loaves of spinach bread and sold them door-to-door. Through word of mouth he soon earned a reputation for baking some of the best bread in the community. The manager of a big-name local retailer approached him and offered him the use of the store’s industrial kitchen in exchange for selling his bread in the store. Increasing his production to over
200 loaves a day, Lufefe had the money to employ a small team to sell and deliver his bread to offices around Cape Town. His business, Espinica Innovations, was born. In
2014 he opened the first Espinica Innovations bakery: a bright-green converted shipping container in the heart of Khayelitsha. He now runs two locations of his bakery, has plans to start a factory in the nearby town of Stellenbosch, and employs a sizeable team of people to run the business. When I arrived in South Africa in 2015 to conduct my fieldwork, Lufefe, known as The Spinach King, had earned another reputation in the community: one of the most successful young Black entrepreneurs in Khayelitsha.
Lufefe’s story has been featured by CNN, the BBC, and dozens of local and regional African news agencies (BBC 2017; Clark 2016). Forbes Africa named him one
1 of the “30 Most Promising Young Entrepreneurs in Africa” (Forbes Africa 2014). The narrative of Lufefe’s success, told by the myriad of press organizations that have reported his story, emphasizes the modern entrepreneurial ‘hero narrative’ of economic self- reliance and individual determination – pulling one’s self up by the bootstraps, mobilizing the few resources at one’s disposal, and using the market to not only one’s own advantage but also to benefit society as a whole. This narrative—told not just about entrepreneurs from poor and marginalized communities like Lufefe, but also about entrepreneurs from wealthy Western nations like Steve Jobs, Bill Gates, and Richard
Branson—undergirds an increasing veneration of entrepreneurship that is being promoted around the world as policy makers and economic development official endorse entrepreneurship as a panacea to solve the problems of unemployment, poverty, and inequality (De Soto 1989; Elyachar 2005; Naudé 2011; UNDP 2004).
South Africa is no exception to this trend. In 2015, South African President Jacob
Zuma gave an address commenting on the nation’s employment crisis, stating that, “We have to work together to provide opportunities for youth. Government cannot perform this task alone…We are encouraging young people to become entrepreneurs” (Hunter
2015). The same year, Lindile Zulu, South Africa’s Minister of Small Business
Development stated that South Africa, “must strive to be a nation of entrepreneurs and not a nation of job seekers,” while Mmusi Maimane, the leader of South Africa’s
Democratic Alliance party claimed, “we need to stop speaking about 5 million jobs; we need to speak about 1 million entrepreneurs” (Dirk 2015; Democratic Alliance 2015). As these comments illustrate, the government of South Africa has embarked on an ambitious campaign to promote entrepreneurship as vital to addressing the nation’s incomplete
2 post-apartheid economic transformation. But despite the lofty rhetoric of South Africa’s political elite, how is entrepreneurship playing out on the ground? How are entrepreneurs viewing their relationship to the market and, more importantly, how has more than a century of minority-driven colonial and apartheid rule impacted South Africans’ ability to become successful entrepreneurs?
In this dissertation I examine the cultural understandings and the practices of entrepreneurship among both Black and White South African entrepreneurs. I do this by
(1) analyzing the motivations of entrepreneurship among Black entrepreneurs in
Khayelitsha (Cape Town’s largest township) who are starting formal businesses with the goal to gain footholds in the power center of the South Africa economy; (2) comparing the material resources that both Black entrepreneurs in Khayelitsha and White entrepreneurs in downtown Cape Town use and rely upon to launch and maintain their businesses; and (3) assessing the entrepreneurial challenges and obstacles faced by both
Black entrepreneurs in Khayelitsha and White entrepreneurs in Cape Town’s wealthy city center. In this introduction, I discuss the theoretical foundations for these three analyses, the research objectives of my dissertation, and the organization and format of the dissertation that follows.
Theoretical Approaches to Entrepreneurship
Entrepreneurship—the process of identifying and enacting new market-based opportunities to earn profit (Shane and Venkataraman 2000)—is by no means new, but the current global veneration of entrepreneurship is the latest incarnation of Western capitalism’s influence on non-Western cultures and politics (Elyachar 2005; Freeman
3 2014). However, anthropologists have been analyzing entrepreneurship as a means of livelihood and a way of life for over six decades, beginning with Belshaw’s (1955) critical essay on the subject. Belshaw outlined two ways that anthropologists can view entrepreneurship: (1) by conceptualizing the entrepreneur as an owner or profit taker, who establishes new firms or businesses that seek to accumulate surplus capital, or (2) by considering the entrepreneur as an innovator, who conceptualizes and articulates new avenues for market activity resulting in cultural change. While these two different views of the entrepreneur have never been reconciled within anthropological scholarship
(Reichman 2013), they represent major streams of anthropological work on entrepreneurship that emerged in the 1960s and 1970s that have each evolved to ask fundamentally different questions about the nature and purpose of entrepreneurial activity.
Hart’s (1975) examination of Frafra entrepreneurs in Ghana during the late 1960s and early 70s built upon Belshaw’s first assertation that the entrepreneur can be seen as an owner or profit taker – in other words, a capitalist. Hart was interested in analyzing entrepreneurship as a mode of production in which an individual accumulates surplus value. He sought to understand whether entrepreneurship—as an action of individual profit accumulation—is viewed by community members as “swindling” peers for the purpose of self-enrichment, or as benefiting the community by enhancing the public good through one’s personal gains (e.g. creating employment, increased charitable benefits, etc.). While Hart argued that Frafra entrepreneurs hold both of these views (and that the community dialectally reconciles these views in different ways according to different situations), Hart’s work set the stage for subsequent generations of anthropologists to
4 investigate the moral values of entrepreneurship – that is, how people understand the role of entrepreneurship within a society and the extent to which entrepreneurship is deemed good and acceptable as a mode of production and work.
In recent years, Hart’s emphasis on the values and morals of entrepreneurship has been taken up by anthropologists who investigate entrepreneurship as a part of neoliberal policy initiatives instigated by Western nation-states and institutions. Such studies examine the extent to which these entrepreneurial development initiatives (e.g. microcredit lending, Fair Trade programs, etc.) cultivate Western, market-centered notions of personhood and values (i.e. ‘subjectivities’) (e.g. Faas 2018; Freeman 2014;
Gill 2000; Huang 2017; Isik 2010; Lyon 2010; Marshall 2018; Moberg 2010; Prentice
2017). However, following critiques of capitalism by influential social theorists such as
Bourdieu (1998), Harvey (2007) and Foucault (2008), many scholars in this line of work begin with the assumption that entrepreneurship, as an economic activity that plays a key role in neoliberal policy, is fundamentally defined by neoliberal values of autonomy and flexibility (Browne 2009). Thus, the questions these studies frequently ask about entrepreneurship focus on the ways that entrepreneurship, as a set of neoliberal values, either (a) suppresses and changes local value systems or (b) is resisted or re-adapted by non-Western populations. However, as the work of Belshaw and Hart shows, entrepreneurship as an economic activity pre-dates the current era of neoliberal capitalism (Elyachar 2012), and therefore, research is needed to understand expressed values of entrepreneurship outside an a priori neoliberal analytical framework (Ferguson
2010; Ortner 2016). As such, my first objective for this dissertation is to examine the motivations that Black South African entrepreneurs bring to their work to better
5 understand their emic understandings and values of entrepreneurship. In doing so, I demonstrate the need for more diverse and local interpretations of entrepreneurship, especially as such understandings may give more insights into more localized and diverse understandings of capitalism (cf. Browne 2009; Gibson-Grahame 2008; Ferguson 2010).
The second major stream of anthropological research on entrepreneurship departed from Belshaw’s second view of the entrepreneur as an innovator – someone who finds new opportunities to make profits. In the 1960s, Fredrik Barth (1963, 1967a,
1967b) built on this aspect of Belshaw’s work to theorize that entrepreneurship is a catalyst for cultural and social change. Arguing against the dominant structural functionalist paradigms of the time, Barth (1963; 1967a) explained that the entrepreneur instigates cultural change by (a) recognizing new opportunities or sources of value (i.e. innovation), (b) articulating (and selling) these new these new sources of value within the community, and, therefore, (c) altering the cultural base of a community. In taking this view, Barth was primarily interested in how the activities and strategies of entrepreneurs re-shape social and cultural structures, in contrast to Hart’s interest in the moral values underlying entrepreneurship.
While a small group of anthropologists inspired by Barth investigated the relationship between entrepreneurial activities and social change (e.g. Levine 1985;
Strathern 1972; Tiffany 1975), Barth’s focus on developing a nomothetic theory of social change has largely been abandoned by anthropologists working on entrepreneurship in recent years. Nonetheless, his interest in the processes and strategies of entrepreneurship has evolved into a long line of work within economic anthropology that examines the entrepreneurial practices of small-scale market traders, vendors, and artisans (e.g.
6 Antrosio and Colloredo-Mansfeld 2015; Chibnik 2010; Clark 1994; Guyer 2004; Little
2004; Milgram 2013; Seligmann 2004; Shepherd 2008).
Within this line of work, anthropologists examining small-scale market traders, vendors examine entrepreneurial practice and strategies to understand the effects of the spread of markets and capitalism upon the livelihoods and traditional economic practices of poor, marginalized, and often, non-Western populations. The major goal of this line of research has been to investigate the diverse mix of economic strategies that people use to participate in market activity and how these strategies enable people to survive under rapidly changing macro-economic conditions (Antrosio and Colloredo-Mansfeld 2015).
One area of particular interest has been the non-market resources and strategies (e.g. gifts, reciprocity, trade, barter, etc.) that facilitate entrepreneurial practice (e.g. Clark
1989; Little 2002; Milgram 2014; Seligmann 2004).
While this line of work has maintained Barth’s focus on operationalizing and analyzing specific entrepreneurial activities and practices, these scholars largely concentrate on entrepreneurial practice within poor and marginalized communities and have not examined entrepreneurial strategies and practices across different social class and economic resource environments (cf. Browne 2004). But as scholars like Ferguson
(2015) and Gibson-Graham (2008) remind us, the diverse economic practices involved in entrepreneurship, and market capitalism more broadly, are not unique to poor and marginalized populations. As nations like South Africa promote entrepreneurship to address wealth gaps and economic inequality one question of interest is: Do the economic strategies of entrepreneurial practice across socio-economic lines rely on or reject the influence of historic power structures like colonialism and apartheid as those
7 entrepreneurs establish their livelihoods and build wealth? Therefore, my second objective for this dissertation is to compare the material resources and diverse non-market economic strategies of entrepreneurs across socio-economic divides. Through this research objective, I show that productive capacity among both sets of entrepreneurs relies upon non-market distributive resources – that is, resources that are directly given or traded among kin and social networks. I argue that given the unequal structures of resource distribution among Black and White South Africans that are rooted in the nation’s colonial and apartheid history, entrepreneurial inequality is reproduced through these unequal structures of distributive resources.
Finally, outside of these two major streams of anthropological work, research on entrepreneurship in disciplines beyond anthropology has coalesced into a sizeable body of interdisciplinary scholarship. One area of particular interest, especially among scholars in economic sociology and business management, has been understanding the social and economic conditions under which people are more or less likely to successfully execute entrepreneurial opportunities (e.g. Amit et al. 1995; Coleman 2000; King and Levine
1993; Levine and Rubinstein 2017; Light 1972; Shane and Venkataraman 2000; Portes and Rumbaut 2006; Pret et al. 2016). In other words, if entrepreneurship is open and available for anyone with innovative ideas (Barth 1963; Schumpeter 1934), why are some groups of entrepreneurs more successful than others? While the dominant literature within the business and management fields largely focuses on generic barriers or obstacles to the entrepreneurial process (e.g. access to markets; communication infrastructure; access to financial capital, etc.), scholars coming from a more sociological perspective have begun to examine the intangible and non-material factors that are crucial
8 to the entrepreneurial process, especially the role of social capital in facilitating access to entrepreneurial resources (De Clercq and Voronov 2009a, 2009b; Gedajlovic et al. 2013;
Greenman 2013; Jack and Anderson 2002; Jennings et al. 2013; Light and Dana 2013;
Marquez 2017; Valdez 2011). While this area of research has been crucial to gaining more nuanced understandings of entrepreneurial success (or failure) beyond a specific set of environmental conditions (i.e. availability of capital, availability of markets, etc.), few scholars have incorporated analyses of cultural capital to better understand the role of culture in the entrepreneurial process (cf. De Clercq and Voronov 2009a, 2009b; Light and Dana 2013). Therefore, the third objective of this dissertation is to contribute to this interdisciplinary body of scholarship by assessing the how entrepreneurs across South
Africa’s racialized socio-economic divides rely upon financial, social, and cultural capital, and which forms of capital pose greater obstacles to entrepreneurs. Through this analysis, I demonstrate the importance of cultural capital in the entrepreneurial process, and I show how entrepreneurs use social and financial capital to acquire the cultural capital necessary for entrepreneurial success. I argue that through this process, cultural capital presents significantly more challenges to entrepreneurs from historically marginalized populations.
Research Objectives
The aim of this dissertation is to contribute to these literatures on entrepreneurship through 13 months of ethnographic research conducted among active entrepreneurs in post-apartheid South Africa. The specific research objectives are as follows:
9 1. To analyze the motivations of Black entrepreneurs to pursue entrepreneurship in
the Khayelitsha township of Cape Town to gain insight into cultural
understandings of the possibilities and purpose of entrepreneurship among a
historically marginalized population.
2. To compare the material resources that Black entrepreneurs in Khayelitsha and
White entrepreneurs in downtown Cape Town require to launch and maintain
their businesses, and the mechanisms through which they secure these resources.
3. To assess the social and cultural obstacles and challenges that both Black
entrepreneurs in Khayelitsha and White entrepreneurs in wealthy areas of
downtown Cape Town face in initiating their business ventures.
Objective 1:
Chapter 2 examines the motivations of Black entrepreneurs in Cape Town’s Khayelitsha township who are starting formal businesses with the goal of gaining a foothold in the power center of the South Africa economy. I demonstrate that while many scholars view entrepreneurship as rooted in (neo)liberal capitalist ideology, ideas of personhood among South Africans do not easily fall in line with Western liberal views, and as a result, Khayelitsha entrepreneurs understand entrepreneurship to have a more altruistic purpose. By envisioning entrepreneurship as legacy building, these entrepreneurs view their businesses—and by extension the capitalist market in which they operate—as vehicles for social change and economic transformation. These understandings of entrepreneurship demonstrate alternative economic imaginations that have the potential to dislodge dominant capitalist ideas of economy.
10
Objective 2:
Chapter 3 examines the material resources and non-market transactions and relations that
White entrepreneurs in the city’s central business district and Black entrepreneurs in the city’s largest township of Khayelitsha use to launch and maintain their businesses. I show how productive capacity in both sets of entrepreneurs depends upon the non-market distributive resources provided by kin and social networks, and how entrepreneurial inequality is reproduced through the unequal distribution of these resources—a structure of distribution that is rooted in South Africa’s colonial and apartheid history. I conclude by discussing the implications this has for how anthropologists discuss the potential of distributive strategies among the poor, as well as the way that scholars and policy makers understand the economic potential of entrepreneurial practice.
Objective 3:
Chapter 4 takes a comparative ethnographic approach to examine the entrepreneurial challenges faced by White entrepreneurs in Cape Town’s city center and Black entrepreneurs in Khayelitsha. In this analysis I ask: (1) how do Cape Town entrepreneurs use various forms of capital – financial, social, and cultural – in the entrepreneurial process and (2) what form(s) of capital poses the greatest obstacles for entrepreneurs. By examining how entrepreneurs rely upon financial, social, and cultural capital my findings highlight the central role that cultural capital plays in entrepreneurship, how entrepreneurs mobilize social and financial capital acquire cultural capital, and how, through this process, cultural capital presents significantly higher barriers to
11 entrepreneurs from populations that are marginalized from dominant entrepreneurial environments and networks.
Dissertation Format and Organization
This dissertation consists of five chapters. In this first introductory chapter, I explain the scope and theoretical foundations of the dissertation. Chapters 2-4 are independent articles, each one analyzing a different facet of entrepreneurship in present- day South Africa. Chapters 2 and 4 are under review in peer-reviewed journals. Chapter 3 is in preparation for submission to a peer-reviewed journal. Chapter 5 provides a summary of my research results, a synthesis of the theoretical contributions from
Chapters 2, 3, and 4, and directions for future research. As this dissertation takes the format of three independent peer reviewed articles, certain sections of a traditional dissertation in anthropology—including the historical and background information on the field site and details on ethnographic research methods and data analysis—are embedded within the various chapters.
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17 CHAPTER 2
ENTREPRENEURSHIP AS LEGACY BUILDING: RE-IMAGINING CAPITALISM
IN POST-APARTHEID SOUTH AFRICA
*This paper is currently under the second round of peer-review in the American Anthropologist.
Abstract
While South Africa’s democratic transition occurred over two decades ago, South
African society remains amidst an economic apartheid with a wealthy minority controlling the nation’s economy. As protests and social movements call attention to the failed economic transformation of the post-apartheid project, a quieter and less radical group of residents in Khayelitsha, Cape Town’s largest township, are attempting to bring about economic transformation in a very different way through entrepreneurship. In this article, I examine the motivations of a new generation of Khayelitsha entrepreneurs, starting formal businesses with the goal to gain footholds in the power center of the South
Africa economy. I demonstrate that while many scholars view entrepreneurship as rooted in (neo)liberal capitalist ideology, ideas of personhood among South Africans do not easily fall in line with Western liberal views, and as a result, Khayelitsha entrepreneurs understand entrepreneurship to have a more altruistic purpose. By envisioning entrepreneurship as legacy building, these entrepreneurs view their businesses—and by extension the capitalist market in which they operate—as vehicles for social change and economic transformation. I argue that these understandings of entrepreneurship demonstrate alternative economic imaginations that could have the potential to dislodge dominant capitalist ideas of economy. 18 “You know, we [Black South Africans] really need to understand how to create wealth for society.
I look at people such as [Cecil] Rhodes, as tedious as his history is, he had a goal to create a
legacy to leave wealth for millenniums, you know? i How does one do that? He even had a country
named after him! How do we do that in a selfless way as Africans but create a society or an
environment that is conducive for people to thrive and be whatever they want to be without
poverty inhibiting those causes?”
– Themba, 27 years old, Khayelitsha Entrepreneur
Introduction
On April 27, 1994, the world watched as Nelson Mandela became South Africa’s first democratically elected president and the decades long struggle against apartheid finally ended. The political liberation of Black South Africans, however, was supposed to be just the beginning. Many envisioned the “new South Africa” as a place where they could not only vote, but where they also had secure housing, adequate food, running water, good education, access to healthcare, and socio-economic mobility. Nonetheless, almost twenty-five years later, political liberation has yet to translate into material gains for most of South Africa’s Black population. Skeptical of government promises that remain unfulfilled and inspired by the global narrative of Silicon Valley, many young
Black South Africans have decided to take economic transformation into their own hands: they have become entrepreneurs.
This paper, drawing on thirteen months of ethnographic research conducted in
Cape Town’s bourgeoning entrepreneurial start-up scene between 2015 and 2016, examines the motivations of a group of Black entrepreneurs located in Cape Town’s largest and fastest growing township, Khayelitsha. While small-scale informal businesses
19 have characterized South African townships for decades, a new generation of self- described entrepreneurs are seeking to formalize and expand businesses that reach beyond the townships and into the powerful, globally integrated business sector of the
South African economy. I ask why these entrepreneurs chose entrepreneurship as a career path, and what their entrepreneurial motivations reveal about their understandings of capitalism and economic transformation in post-apartheid South Africa. While the South
African government has promoted entrepreneurship and the development of SMMEs
(small, medium, and micro-enterprises) as part of an integrated approach to transform the economy since the earliest days of the democratic transition (Iheduru 2004; James 2014;
Ferguson 2015), there is now a groundswell of media, marketing, and public figures promoting entrepreneurship, especially among Black South Africans. Certainly, this new buzz is not unique to South Africa. Celebrity entrepreneurs permeate the international media on a daily basis, and entrepreneurship has become a key project within international development programs (DeSoto 1989; UNDP 2004). However, as South
Africans continue to struggle with high rates of unemployment and poverty, entrepreneurial success stories have taken on new meanings and provided new inspirations as the first generation of “born frees” enter the workforce.
In analyzing the entrepreneurial motivations of this new generation of Khayelitsha entrepreneurs, I build upon critiques of political economy theories (Ferguson 2010;
Gibson-Graham 1996) to highlight the need for anthropologists to pay attention to diverse understandings of entrepreneurship and capitalism more broadly. I demonstrate that while many scholars view entrepreneurship as rooted in neoliberal capitalist ideology (Bourdieu
1998; Foucault 2008; Freeman 2014; Harvey 2005), Khayelitsha entrepreneurs are
20 mobilizing entrepreneurship in more diverse, nuanced and often altruistic terms: as a path through which they can establish and leave behind greater wealth and opportunity for future generations of Black South Africans. These new understandings of entrepreneurial work in Khayelitsha, however, must be understood within the context of Southern
African notions of belonging and personhood, which are shaped by a broader history of labor practices and material relations. In this way, by envisioning entrepreneurship as an act of legacy building, these entrepreneurs view their businesses—and by extension, the capitalist market in which they operate—as vehicles for social change and the long overdue economic transformation of South Africa.
Anthropology, Capitalism, and the Economic Imaginary
Since Malinowski, the meanings and motivations of human economic behavior have been foundational to anthropological inquiry. Early ethnographic work examined exchange in non-market societies, but as globalization accelerated in the 1980s, anthropologists shifted their attention to the global spread of Western capitalism (Ortner
2016). In critiquing post-war neoliberal capitalism as a form of neo-colonialism, political economy frameworks enabled anthropologists to better understand structural economic causes behind poverty, inequality, racism, and ethnocentrism.
Despite the importance of these political economy perspectives to understanding the ramifications of Western capitalism, some scholars were wary from the outset that such frameworks could obscure other aspects of human economic behavior. Notably, J.K.
Gibson-Graham (1996) built on feminist critiques of economics to challenge anthropologists to re-think and re-frame their inquiries, demonstrating that capitalism is
21 not a monolithic system, but rather is an amalgamation of diverse actions (e.g. household labor, gift exchange, etc.) that coexist with those recognized in political economy theories
(e.g. wage labor, sale of goods and services). More importantly, however, Gibson-
Graham argued that our understanding of a reified capitalist system stems from scholarly discourse we use to talk about and think about capitalism as a hegemonic “force.” In doing so, they challenged scholars to not only illuminate diverse economic practices, but also to investigate diverse worldviews of economy, noting that such views have the potential to destabilize the grasp of neoliberal capitalism on our collective consciousness.
In other words, the possibility for radical change rests first and foremost on our ability to imagine the multitude of alternatives.
Of course, analyses of diverse, non-market economies is the cornerstone of anthropology, but Gibson-Graham inspired a new generation of anthropologists to explore the rich diversity of non-capitalist practices within capitalist market environments, including sustainable development strategies (Mendoza et al. 2017), kinship networks (Yanagiasako 2002), norms of reciprocity (Wutich et al. 2017), barter systems (Burke 2012), and labor exchange (Lo and Shear 2015). However, fewer scholars have mobilized the other facet of Gibson-Graham’s challenge to explore diverse worldviews of capitalism. As Browne (2009) notes, in devoting much attention to non- market economies (and non-market practices), anthropologists have long critiqued capitalism as the morally corrupt and binary opposite to reciprocal and gift-based economies. Consequently, anthropologists are historically squeamish of examining capitalist practices and/or ideologies, except when to critique (Elyachar 2012; Ferguson
2010; Ortner 2016).
22 Breaking with this tradition, however, recent work has begun to explore diverse understandings of capitalism (Appadurai 2013; Ferguson 2010, 2015; Souleles 2019; also see Browne’s 2009 and Ortner’s 2016 reviews). Appel’s (2014) ethnographic account of
Occupy Wall Street demonstrators, for example, illustrates the multitude of ways that people are actively re-imagining capitalist practices, showing that there is “a proliferation of ideas lying around” (pg. 619). But for scholars to recognize these diverse ideas and possibilities, we must suspend our long-held notions of political-economic structures and engage in our fieldwork with “thick description and weak theory” (Gibson-Graham 2014) to not only recognize diverse practices, but also listen to and identify the diverse understandings of what capitalism could be.
Entrepreneurship: Reproducers of Neoliberal Capitalism, or Agents of Economic Change?
In examining diverse understandings of capitalism, a key group of economic actors that anthropologists often overlook are entrepreneurs, frequently thought of as
“neoliberalism’s heroic actors” (Freeman 2014, 17). Entrepreneurship entails identifying, evaluating, and carrying out market-based opportunities (Shane and Venkataraman
2000). And, of course, entrepreneurship has been central to neoliberal policy agendas for decades, promoted extensively by governments, NGOs, and international development schemes (DeSoto 1989; UNDP 2004). Regarded as the ideal work for the self-sufficient, autonomous, liberal individual, Western thought views entrepreneurship as a ‘win-win- win’ practice, enabling a person to be free of bureaucratic constraints, generate their own income, and contribute market (thus societal) value (Elyachar 2012; Ferguson 2015).
23 Thus, through the lens of political economic theories, it is easy for scholars to view entrepreneurs as “re-producers” of hegemonic neoliberal capitalism and entrepreneurship as a “technology of self” (Freeman 2014) through which individuals are fashioned as
(neo)liberal subjects (Bourdieu 1998; Foucault 2008; Harvey 2005). Indeed, anthropologist have been front and center in making this neoliberal entrepreneurial ideology explicit, and demonstrating how destructive it can be, especially to poor and marginalized populations (e.g. Escobar 1995; Faas 2018; Gill 2000; Rahman 1999).
Yet, Joseph Schumpeter (1934), the Austrian economist who first examined the relationship between capitalism and entrepreneurship, theorized that entrepreneurs serve as key agents of change within capitalist societies by transforming markets through diverse and new ideas. Anthropological scholarship on entrepreneurship, while underdeveloped as a cohesive body of work (Lundy et al. 2017; Stewart 1991), tacitly supports Schumpeter’s view. Through examinations of small-scale and informal entrepreneurial work (that occurring outside of the purview of government regulation and taxation (Hart 1973)), countless studies of vendors, traders, hawkers, artisans, etc. demonstrate the diverse, market-based practices through which people secure livelihood and produce change in their local environments (Antrosio & Colloredo-Mansfeld 2015;
Chibnik 2003; Clark 1994; Geertz 1967; Little 2004; Lundy et al. 2017; Milgram 2011;
Spring and McDade 1998; Strathern 1972; Wutich et al. 2016). While rarely labeled as
“entrepreneurs” in anthropological analysis, these practices undoubtedly constitute entrepreneurial activities that institute new avenues of change and possibilities (positive and negative)—a key argument illuminated by Barth (1963) but largely dropped in later anthropological work.
24 Thus, anthropological analysis of entrepreneurship poses a curios paradox: From the perspective of political economy theories examining formal entrepreneurialism, entrepreneurs are viewed as reproducers of hegemonic neoliberal subjectivities. Yet, from the perspective of diverse economic practices examining small-scale and informal entrepreneurs, often on the margins of urban global economic power centers, entrepreneurs are understood as scrappy agents of change within their local communities.
As anthropologists recognize the fluidity between informal and formal modes of work
(Ferguson 1990; Guyer 2004; Hart 2007), how do we reconcile these competing views of entrepreneurship? Despite entrepreneurship remaining central to so many economies, there remains little understanding of how entrepreneurs themselves understand their economic roles—if and how they envision economic change by pursuing entrepreneurship and what they envision that change could look like. This paper takes a diverse economies perspectives to examine how entrepreneurs in Cape Town’s
Khayelitsha township understand and imagine their role in the wake of South Africa’s incomplete post-apartheid transition.
Economic Insiders and Outsiders: Post-Apartheid South Africa’s Distributional Regime
Cape Town is a sprawling city, perched on a peninsula at the southwestern tip of the African continent. Upon arrival, one cannot help but notice the city’s most defining landmark, Table Mountain – a flat plateau that sharply rises 3,500 feet above the peninsula, overlooking the port where Dutch East India Company ships first docked in the 1650s. Downtown Cape Town, and the city’s wealthiest suburbs, hug close to the
25 rugged base of the mountain, nestled among lush gardens and terraced vineyards with stunning ocean views. The city center is picturesque and cosmopolitan. As people flock to Cape Town for its ideal weather and relaxed atmosphere, the city has become one of
Africa’s fastest growing technology and startup hubs, referred to in the city’s start-up scene as “Silicon Cape” and “The Digital Gateway of Africa.”
But Cape Town life looks very different further away from the mountain. A 30- minute drive from downtown is the heart of Khayelitsha, the largest township of the greater Cape Town area. Central Khayelitsha is energetic and bustling. Flat, sandy, and dusty, the main streets are lined with converted shipping containers that house barber shops, bakeries, hair dressers, and spaza shops (small stores selling basic supplies). Street vendors mill about on the roads, selling everything from grilled meat, to fruits and vegetables, to cell phone cables and old car parts. The formal areas feature paved roads, modest to elaborate housing, a hospital and a new shopping center. However, over half of
Khayelitsha’s estimated 1 million residents live in informal shack housing that spills out along the dirt roads and sandy plains of False Bay.ii While the lush suburbs and the quaint downtown neighborhoods at the base of Table Mountain may be Cape Town’s face on the New York Times travel page, Khayelitsha and neighboring townships are the engines that power the city. These townships are where many of Cape Town’s janitors, domestic workers, trash collectors, construction workers, restaurant servers, shop attendants, street vendors, and the itinerant hucksters live.
While apartheid officially ended in 1994, the de-racialization of public policy did little to close the racial wealth gap or alter the nation’s racialized geography, producing a
“distributional regime” that divides the country into a world of insiders (those in the
26 town) and a world of outsiders (those in the townships and rural areas) (Seekings and
Nattrass 2005). The world of town, with its largely White but increasingly multi-racial, wealthy, and globally integrated business and finance sector experiences life similar to most OECD nations. The world of the townships, where the majority of urban Black
South Africans live, experiences extreme poverty, unemployment upwards of 60%, and a dearth of basic goods and services like plumbing and sanitation (Callerbert 2014;
Goodman 2017; McFarlane and Silver 2017; Makhulu 2015). Today, the total population of South Africa is composed of over 80 percent Black South Africans. Yet, Black South
Africans make up only 16 percent of the resident population in downtown Cape Town but
99 percent of the resident population in Khayelitsha (Statistics South Africa 2011). While affirmative action policies, known as Black Economic Empowerment (BEE), have been moderately effective in transferring some of the nation’s wealth and building a small but growing Black middle class—resulting in small but significant socio-economic diversity within the nation’s townships—the vast majority of Black South Africans have yet to experience any sort of economic transformation (Iheduru 2004; James 2015; Nattrass and
Seekings 2001).
Personhood, Dependency, and Economic Opportunity in South African Townships
During the colonial and apartheid eras, townships existed as government delineated dormitories for the Black workers who were essential to the urban, White- owned economy. African men, both voluntarily and by coercion, left rural subsistence livelihoods to submit to a racialized system of wage labor. This shift, scholars argue, had profound social implications, decoupling notions of personhood from building and
27 providing for extended kin-networks via peasant production and instead linking male
African notions of personhood to wage labor (Bak 2008; Button et al. 2018; Ferguson
2015). In many Nguni-speaking populations, manhood is equated with building a homestead—providing not only for one’s nuclear family but also for one’s network of dependent kin (Seekings 2008). Such systems of dependency—both belonging to and providing for one’s network—characterize the worldview of many Nguni-language cultures. Unlike Western notions of the liberal autonomous individual, cosmologies among many peoples of Southern Africa define personhood through belonging, and wage labor has come to play a key role in defining both how someone belongs to and provides for a greater network of relations (Ferguson 2013, 2015).
However, as wage labor declined, and rural-urban migration accelerated
(Seekings and Nattrass 2005), economic opportunity in Khayelitsha has become largely characterized by modes of informal, improvisational work (du Toit and Neves 2014). In this regard, informal entrepreneurship has been a mainstay of Khayelitsha for decades.
By taking advantage of (informal) market-based opportunities, township residents not only obtain the small amounts of cash and resources that they need to survive, but in some instances—such as South African taxi empires—acquire significant amounts money. These modes of informal market practices, however, generally do not seek to accumulate wealth (Neves and du Toit 2012), but rather are key to (re)distributing resources to support networks of dependent kin. Given its links with African male notions of personhood, the decline of wage labor has also had profound implications for the gender dynamics of Southern African households. With many men unable or unwilling to provide for kin networks, many women are left as providers for their families, and
28 conceptualizations of motherhood increasingly entail providing financially for children
(Button et al. 2018; Seekings 2008). Thus, informal entrepreneurship is especially prevalent among South African women, seeking to provide for their children both in the absence of, or in addition to, male financial support (Button et al. 2008; Bak 2008).
The survivalist nature of township businesses, however, does not mean that these informal entrepreneurs do not plan long-term. In the absence of (and often in addition to) wage labor, many township residents—like countless other small-scale entrepreneurs in other parts of the world (Portes et al. 2002)—pursue informal market opportunities for the expressed purpose of providing education for their younger dependents so that they can attain higher-skilled jobs, achieve more middle-class lifestyles, and better contribute to and support their dependency networks, (Button et al. 2018; Neves and du Toit 2012).
The logic of the informal, survivalist businesses of South African townships is generally one of a stepping stone—or a “side hustle,” as one my interlocutors termed it—to pay for education and training that better position one’s dependents in the wage labor market.
With this in mind, many township residents running informal businesses expressly reject formalization in order to avoid regulation and taxation (Neves and du Toit 2012). Such practices have led scholars of African economies to argue that “formal” and “informal” are not two distinct economic spheres, but rather are two different modes of economic actions, each providing certain advantages or disadvantages (du Toit and Neves 2014;
Guyer 2004; Hart 2007).
29 The New Khayelitsha Entrepreneurs
Both wage labor and informal modes of entrepreneurship remain vital to livelihood in Khayelitsha, however, nearly a quarter century after the democratic transition, a new type of entrepreneur has begun to emerge in South African townships.
Building on higher levels of education—which parents or guardians often worked to provide—as well as increased technology skills and improved internet access via wireless networks, many of this new generation are taking inspiration from the global success stories of Silicon Valley tech entrepreneurs and are seeking different avenues for socio- economic mobility from the wage labor and survivalist work of previous generations.
Many of these entrepreneurs are leaving stable salaried jobs or secure wage-labor positions, while others (namely those who can rely on greater financial support from family) decide to forgo the job market altogether, pursuing entrepreneurship straight out of post-secondary education
These new modes of formalized work in Khayelitsha, however, cannot be seen as fully grass-roots phenomena. South Africa’s Black Economic Empowerment laws require companies to make “corporate social investments” (CSIs), which promote skills development and training initiatives for “previously marginalized” populations. Thus, both small-scale “social enterprises” as well as larger companies in Cape Town’s growing digital technology sector are funding initiatives to promote entrepreneurship in
South Africa’s townships. In Khayelitsha, this has manifested through the establishment of entrepreneurial “hubs” (co-working spaces) designed to mimic a Google-like working environment with open working space, colorful walls, bean-bag-chairs, as well as a private conference room. Most importantly, however, the space provides Khayelitsha
30 entrepreneurs with a street address, reliable internet connection, and computer/ printing stations. The first hub, run by a small downtown-based social enterprise, opened in
Khayelitsha in 2013, but only lasted for two years because not enough entrepreneurs could afford to pay membership fees. In 2014, a second hub opened in central
Khayelitsha (currently the only such space in Khayelitsha) funded by a downtown-based non-profit. The new hub runs on money from CSI investments and thus does not charge entrepreneurs. Any member of the community with a business idea can approach the hub and acquire membership; most members hear about the space via word of mouth in the community. The hub occasionally hosts networking events and brings in outside investors who host pitching competitions for entrepreneurs to pitch and compete for investment funding, though most such pitching events and investors remain in town.
Given that many township businesses tend to remain informal and avoid state regulation, why is this new generation of entrepreneurs choosing to not just formalize and register their businesses, but to jump in, whole-hog, seeking to pitch their ideas in competitions, earn venture capital, and join the rat race? Why give up the security of wage labor and salaried jobs and risk the disapproval of families who worked so hard to give them a shot of higher-earning careers?
Research Methods
This research is part of a larger ethnographic project that examines entrepreneurship across Cape Town’s gulfs of inequality, including 13 months of participant observation in three different entrepreneurial hubs and interviews with 60 active entrepreneurs. My data for this article, however, focus on 10 months of participant
31 observation in Khayelitsha’s entrepreneurial hub and interviews with 20 of its entrepreneurs. My interview sample represents a range of businesses (e.g. technology, service, retail, financial), life circumstances (e.g. both men and women with varying socioeconomic circumstances within the Khayelitsha community), and stages in business.
While all interviewees have a business formally registered with the South African
Revenue Service, almost every entrepreneur had previously failed at one or more ventures (generally due to lack of capital or resources). Some had established businesses with multiple employees while others were just beginning, some shifting from informal to formal. The early stage businesses were essentially (formal) survivalist businesses.
I conducted interviews in English, which prompted open-ended responses to a variety of topics on entrepreneurship, but I allowed the conversation to proceed in a free- flowing manner, allowing respondents to describe their entrepreneurial careers in their own way.iii I recorded all interviews with the consent of participants. As a professional courtesy, I compensated all of my interview participants with R200 for their time.iv My analysis followed inductive techniques of thematic analysis (Ryan and Bernard 2003), first eliciting all themes pertaining to the entrepreneurial motivations and aspirations, then grouping those themes into higher-level themes that cut across all interviews and field notes (Quinn 2005). I used interviews with community leaders, field notes, and follow-up conversations with key community members to cross-check and validate my thematic findings (Creswell and Miller 2000). To protect identity, names here are pseudonyms and businesses are described broadly.
32 “Mummy built an empire for us”: Entrepreneurship as Legacy Building
Mary caught my eye the first week that I began working out of the Khayelitsha entrepreneurial hub, impeccably dressed in colorful business suits and stiletto heels. I had seen her around Cape Town at different networking events and pitching competitions, and several other entrepreneurs mentioned her as a role model—a “hustler” and a “go- getter.” Mary is 29-years-old and grew up in a small village in the Mpumalanga province with her grandparents. She moved to Cape Town to do a business degree at the Cape
Peninsula University of Technology (CPUT), a degree that her father (a government worker) encouraged her to do so that she could get a good corporate job. Shortly after finishing her degree, she began working for a financial firm downtown, but she was unfulfilled and had always dreamed of starting her own business after watching her grandparents open a primary school in her village. “I drew a lot of inspiration from them, seeing how they were respected by the community,” she told me. “They made a difference, not only in their lives but in people’s lives.” To Mary, the broad effect that her grandparents had in her village—improving the lives of others and becoming well-known and well-respected for something that would endure past their lifetime—constituted their
“empire.” “I thought, one day I’m going to make it. I’m also going to build something, an empire.” So, after two years of working as an analyst, she left her job to start her business. But it was not smooth sailing. Her first venture, a fashion business, failed because she could not afford the upfront costs. She then decided to start a business providing IT services to township populations. The start-up costs for an IT business were low, and she believed that IT services were vital to township communities who often lack technical knowledge.
33 But even with the low(er) start-up costs, she experienced difficulties in getting funding for equipment and programmers needed to expand her business. She lamented the petrol costs for driving to networking events with funders, and she mentioned that she often missed her corporate salary. I asked her why she was willing to give up a predictable salary to risk the uncertainty of entrepreneurship, a question that her father had also been on her case about. Without pause, she responded, “You know, corporate is full of bullshit. It’s a very dangerous comfort zone. You can stay there forever hoping that I’ve got it, when you haven’t, you haven’t. You haven’t built anything for yourself, you haven’t built something for your kids… I’m all about building legacy. I don’t have kids now, but when my kids come, they must know that our mummy built an empire for us.”
While Khayelitsha entrepreneurs expressed a range of motivations for starting their businesses, Mary’s story encapsulates a vision of entrepreneurship that emerged across all of the entrepreneurs I spent time with: entrepreneurship is a path through which they could establish and leave something behind, not just for their own children, but in a broader way for future generations of Black South Africans. Mary and a few others explicitly referred to this motivation as “legacy building.” Like Mary, they aimed to earn reputations and respect within the community and to affect not only their own lives and those in their own networks of kin, but also the lives of those within the broader community. This theme manifested in three key ways, discussed below: (i) the desire to build wealth and networks of support (within and beyond their own kinship networks) (ii) the desire to transform one’s community and (iii) the desire to assert Black presence in the mainstream business sector.
34
(i) Building wealth and networks of support
Unlike the informal, survivalist businesses that are characteristic of South African township economies, this new generation of entrepreneurs are establishing their businesses with the expressed purpose and intent to build wealth. Many entrepreneurs described the hardships that they and/or their families endured growing up, often living in informal housing or in rural areas, often with unreliable food and water. Resource insecurity and lack of perceived opportunities beyond wage labor pushed entrepreneurs to not just provide for their dependents’ immediate needs, but to leave wealth behind for them, wanting to give younger dependents greater freedom to choose their life paths.
However, entrepreneurs’ aspirations also clearly go beyond providing for their own kin, viewing their ventures to be vital for networks of non-kin within the township community and beyond.
Linda, a 43-year-old woman who owns a clothing business demonstrates this key shift, having transitioned from an informal survivalist business to one aimed at building wealth. Raised by her great-grandmother in a rural village in the Eastern Cape, Linda moved to Khayelitsha at 17 to stay with her mother who was working in the city as a nurse. However, fearful of her abusive step-father, she rarely stayed at home. After falling pregnant, Linda worked as a cleaner to support herself and her daughter while she finished her matric (high school degree). During this time, she met an older, well-off man from Cameroon whom she eventually married. He paid for her to acquire a university secretarial certificate and used his connections to secure her a job as a secretary with a large national bank. But ten years later, her marriage dissolved; she quit her job at the
35 bank to withdrew her pension before her divorce finalized, afraid that her husband would claim it. One of Linda’s clients, however, had just started a business and hired her after hearing that she was forced to quit her bank job. “That’s where I’ve learnt a lot about business because he actually put me closer to him; we were so close, working hand in hand.” But in 2012, after three years of working, the business folded and Linda lost her job.
Struggling to find other employment and needing to support her two children,
Linda approached a fashion designer in town whom she met while working at the bank. She asked her if she could purchase the non-resalable clothing that people returned and sell those clothes in the townships. The woman agreed, and Linda used her last R500 to purchase the clothing. Selling the clothing out her car to friends and acquaintances in Khayelitsha, Linda turned her R500 into R2,500. From there, she approached other designers in town as well as companies, asking to sell clothing to their workers during the lunch hour. For three years, Linda was been very successful, comfortably supporting herself and her children.
In 2015, however, Linda decided that she wanted to grow her business beyond an informal venture, and she registered it with the South African Revenue Service.
“My plan is actually to have this nice shop where I will have different designers’ clothes, but I want it to be in the middle [between town and the townships] because my clothes cater to Black people and White people as well.” While Linda made good money informally, she wanted to formalize her business to reach beyond the township market. Without registering the business, she could not acquire additional investor funding or business loans to establish a boutique, and formalizing an established
36 business enabled her to leave something tangible to her children. Linda took pride in saying that perhaps her son may take over the business and often called it “a family company.” Expanding her business, however, would also allow her to employ other people. While Linda started the business to provide for her children, her vison of successful entrepreneurship evolved, believing it to be something that should support other people, beyond her own children: “The day that I say I am successful is the day that my boutique is there, that I am making money that I say I am going to make, and
I’m employing people, which is creating jobs for other people so that they can have money. For me that is being successful because I can provide for myself and for other people.”
While not all Khayelitsha entrepreneurs have children, all had dependents who they supported—from parents, to grandparents, nieces, nephews, and friends—who were part of their distributive networks. However, like Linda, all entrepreneurs expressed clear desires to not only support their own kin, but to support the networks of others in the township communities. For example, Ntando, who left a salaried IT job in town to start a construction business in Khayelitsha explained that providing stable employment to people in the community is, “just motivating…I want to stand out and want be part of history. I think I am driven by making change, you know? It is a very, very nice feeling when you know you have assisted a family. Kids can go to school. Kids can eat. Less crime within the community and all of that, you know. So, I think that’s the main reason I decided, you know, to quit [my job in] IT.” Christine, who left her salaried position to start a technology consulting business expressed similar sentiment: “When you employ someone here, it’s not just one person that
37 benefits out of it, it’s a whole family. Five, six other individuals that depend on that person.”
Khayelitsha entrepreneurs, however, did not consider leaving their dependents money by itself to be their motivation. Not one entrepreneur expressed a desire to build up a business to sell for a large profit. Rather, akin to other African notions of viewing “wealth in people” (Guyer 2004), they saw a stable and enduring business that generated good income and employment for others to be the ultimate form of wealth and legacy. John, 33 years old, who started a music production business in
Khayelitsha, explained this quite clearly. He stated that he was not motivated to sell a business and reap the profits because such a move would cause him to lose control of his legacy: “Although you are making profit [by selling your business], you have failed because at the end of the day the main thing you were creating was your own legacy. Now you have created a legacy for someone else. That is a failed business for myself.”
(ii) Leaving a transformed and better community
In addition to providing material support, entrepreneurs in Khayelitsha saw their ventures as transformative forces in the community. First and foremost, all of the entrepreneurs repeatedly expressed the need to create jobs, believing job-creation would produce ripple-effects, not only by supporting other networks, but also reducing crime and violence as people become employed. Beyond this, however, many viewed their businesses as conduits for transformative, grass-roots solutions to Khayelitsha and other townships.
38 Lwazi, is 32-year-old man who runs a financial advising business in Khayelitsha and the surrounding townships. He grew up in the informal parts of Khayelitsha with his mother (a hospital maid) and his three siblings. He used an educational loan to attend the
Cape Peninsula University of Technology, where he earned a national diploma in cost and management accounting. Upon completion, a national bank hired him as a business consultant, and he was quickly promoted to a managerial position. He later worked as an accountant for the Department of Justice, and then a job in a national finance firm.
However, in 2012, he felt that he could use his experience to assist others in Khayelitsha, so he left his job to start a financial advising business for township populations. “In my heart, I’ve got this strong conviction that I can do more than just going for work,”
Lwazi told me. “I would rather create employment than look for employment.” Like
Lwazi, other entrepreneurs expressed their conviction to be job creators, lamenting high unemployment rates among Black youth and telling numerous stories about siblings and/or friends who are unemployed.
This desire to create employment was not only driven by the desire to alleviate poverty and enable others to “put bread on the table,” however. All entrepreneurs believed employment was key to reducing crime and creating a safer environment.
“The crime is too much here in Khayelitsha,” Linda told me one afternoon. “They
[criminals] first stripped my car… and two days later, someone came through my bathroom window…but sometimes when I look at people who are committing crime, I don’t blame that much. [They] don’t have anyone to help; the only thing [they] can do is grab your bag… because there is no one supporting the youngsters.” John explained,
“By doing that [creating jobs], as soon as a person is actually well employed and well
39 paid…you actually help that person to buy food for their kids, to buy clothes, to actually have a beautiful house as well, by actually opening your business…Like as you know, more than 60% or 70% of our young people are not employed here... that
[providing jobs] will fight against crime. In Khayelitsha and all the other townships that there is lots of crime. A lot of crime because of why? Because people don’t have any other choices.”
While crime reduction was a primary concern, many entrepreneurs also expressed the importance of transforming the community directly through the mission of their businesses. “If you are an entrepreneur,” explained Lwazi, “you should be able to employ people, create employment for people and be able to develop the community. Your product should be one that develops the community.” Thus, like
Lwazi, most worked in wage jobs until they identified the right opportunity. Mbulelo, a 32-year-old man who started an IT consulting business after quitting his job working in a furniture warehouse decided to start his business “because of the need. I was working part time helping most of my friends and family fixing their computers. That’s where I knew, okay this is what is where, what I have to do when I quit my job actually.
Ja, helping other people, because there was a need actually, that people need these IT skills.” And John, who started his music production business in Khayelitsha, forewent a large salary working for a bigger production company in Johannesburg because,
“there were no other companies here [in Khayelitsha] when it comes to entertainment, like there were a lot of kids and talent and there was no development in terms of training them in music. And I thought ok, this will be a good idea to actually bring those kind of services… I wanted to develop people and make this business right here
40 in Cape Town and be successful here in Cape Town.” Other businesses developed to serve township needs include recycling businesses, a bicycle delivery service for medication, children’s sports camps, musical education, and educational software and apps that target rural and township populations.
Ultimately, Khayelitsha entrepreneurs envision their businesses to be transformative community projects not only because of the needs they fill, but also because they identified, built and controlled the services needed in the community. As
Lwazi said, “In Khayelitsha…I don’t like using a color but it’s mostly White people.
They come and start their businesses here, they take a lot of money and then they leave.
Some of them never even touch down to see how is Khayelitsha or where is Khayelitsha exactly.”
(iii) Asserting Black presence in the mainstream economy
The drive to establish formal businesses, however, went far beyond providing material support and needed services. All entrepreneurs discussed deep-seated desires to disrupt the racialized divides between township and town and establish Black presence and influence in the power center of the South African economy. Comments like, “we have so much talent in the Black community” and “there is so much potential in the township” were common, and entrepreneurs often spoke about vicious cycles of township poverty and lamented the dependence of Black South Africans on the White- dominated business sector, noting that too many young Black South Africans saw wage labor (for mostly White-owned businesses) as their only option.
41 Nselo, a 26-year-old man, is a well-known entrepreneur in Khayelitsha, having established multiple businesses and acquired significant start-up capital through entrepreneurial pitching competitions. While he was born in Khayelitsha, he grew up in a rural village in the Eastern Cape with his extended family. He lamented that no one in his home community understood what he did, and his parents (a domestic worker and a petrol station attendant) accused him of being lazy for quitting his corporate job in tourism—a job they worked hard to help him get by helping to pay for his university degree. But when his family saw him profiled in the Cape Argus newspaper as an “entrepreneurial rising star,” they began respect him more. “They thought entrepreneurs are supposed to only be white-skinned people,” said Nselo. “I said no, change the mind-set…we normally believe in spaza shops, like those small things, like shoe makers, barber shops…but how do you turn those things into something that is globally recognized? Because if you think here [in the township] you end up here, but if you think there [beyond the township], you are going to end up there.” Christine expressed the same sentiment: “For our generation, we don’t want to be just a township business. You want to be the business that was started in this environment but moved on to play with the big leagues.”
For these entrepreneurs, breaking into the (formal) mainstream economy served as a point of pride, but they also saw formalization as securing specific advantages for the type of business that they wanted to conduct. They all recognized the importance of informal businesses South Africa’s townships, but they considered their paths as entrepreneurs (as opposed to what they called the “businesses people” of the townships) to follow a different philosophy, looking to secure advantages beyond
42 money. For example, Jason, a 33-year-old man who opened a catering business explained to me, “Most businesses here are informal and they’re making lots of money, hey. Make no mistake, there are people, especially the taxi guys here. Those guys, they are very rich. But it's informal. It’s just money that comes in and out.”
Jason, who only recently begun his business, had just fallen out with a potential partner because the partner did not want to register the business. “He wanted to do things the kasi (township) way,” Jason said. But Jason wanted to register the business so that he could obtain a BEE (Black Economic Empowerment) certificate, which would formally recognize him as a Black owned company and allow him to compete for contracts with businesses in town.v “We had different ideologies altogether,” he said of his partner. Obtaining formal certification, especially as a Black owned business is necessary to “play in the big leagues” and acquire stability and secure income streams that could lead to other opportunities to grow the business as opposed to, as Jason put it, “money coming in and out.”
While formalization allowed entrepreneurs to grow their businesses and reach beyond the township, they also saw formalization as securing advantages for the broader community. Entrepreneurs explained that formalizing their businesses allowed their employees to claim formal work experience and be better positioned for other jobs in the formal economy. As Christine said to me, “The administration of
[formalizing] is a pain, but looking at the long-term and the benefits of it—you’d rather pay your taxes knowing that you are contributing to a bigger picture than just yourself… Like, people have B&Bs that are not registered, and they make money because people come in and they stay and pay for the service. But the people that are
43 employed they are not tax payers…and if they get fired from the B&B, they can’t go claim their UIF (unemployment insurance) or all those other benefits.” While many informal township businesses made the explicit choice to avoid government bureaucracy and taxes, these entrepreneurs expressed great faith in the advantages that the state could provide by engaging with the formal economy.
Finally, while entrepreneurs by no means saw entrepreneurship as a path for all people in the community, they nonetheless consistently expressed a desire to serve as mentors to help other Black South Africans to establish businesses of their own. “After I have made some money,” Mary told me, “I’m going to go back to the community, you know, and share the skills and my entrepreneurial journey. ’Cause I know how people, how Black people, are battling to get into business, and you need a lot of support ’cause we know how hard it is for us as Black people.” Other entrepreneurs stressed the importance of having Black mentorship because mentorship from White business leaders, despite good intentions, was simply out of touch with the realities of the townships. As
Themba explained “But they [White South African entrepreneurs] do not understand our social norms you know. So many of the mistakes that Black entrepreneurs make are because we tend to take whatever they tell us and use it, but they do not actually understand the community.” Or, as John said in reflecting on his motivation to serve as a mentor to other aspiring Black entrepreneurs, “The biggest need is to actually develop our own.”
44 Conclusion: Legacy Building and the Re-imagining of Capitalism in a Post-Colonial Economy
Entrepreneurship in recent anthropological scholarship is understood as the ultimate “technology of self”—a tool, used and promoted by Western capitalist powers, that molds and fashions (neo)liberal senses of personhood centered around the autonomous, emancipated individual. But, as Ferguson (2013, 2015) and many scholars of Southern Africa demonstrate, ideas of personhood among South Africans do not easily fall in line with liberal common sense, and as a result, South Africa has become a fascinating site where different “uses of neoliberalism” are being mobilized in ways that are forcing us to rethink the diverse possibilities of capitalist practices. In this article, I argue that, among a new generation of entrepreneurs in Khayelitsha, entrepreneurship cannot be seen as a “technology of self,” but rather it is a mechanism for building legacies that serve as new distributional regimes in which Black South
Africans are attempting to take back economic positions of power and use capitalist practice to support their networks in more just and equitable ways. As Ntando told me one afternoon, becoming an entrepreneur is about “the bigger picture” and, “the bigger picture is not now. It’s five, it’s ten, twenty, thirty, forty, fifty, hundred years later.
That’s what we are looking at. We are trying to build for our great, great, great children.”
It is important to note, however, that the views of Khayelitsha entrepreneurs should not be construed as uncritically glorifying capitalism, and they certainly do not simplistically subscribe to the adage that a “rising tide lifts all boats” – a metaphor for the liberal argument of unbridled individualist pursuit of self-interest. As Themba’s
45 quote at the start of this article expressed, Khayelitsha entrepreneurs are painfully aware that the economy they are working within is same economy that subjugated
Black South Africans for generations. But as Themba elucidated, this generation of entrepreneurs views capitalism in more nuanced terms, as both an oppressing force in their history, but also as a viable path for “beating the devil at his own game” and rectifying the deep inequalities that stem from colonial conquest. For them, entrepreneurship is a possible path towards decolonization in the sense that Fanon (2007) described, a mission to repossess the economy and assert a capitalism of their own making. As Themba commented, referring to globally integrated sector of the South
African economy, “If we were to come and just topple what is already there, I think it will take the next 100 or 200, maybe 500 years to start over. We do not need to reinvent the wheel we just need to pimp the wheel…If we could take what we have, and the lessons from our past, and pimp the wheel, you know, and continue moving forward, things will be better for us.” vi
It remains to be seen whether the economic imaginary of Khayelitsha entrepreneurs will constitute the freedom and transformative effect that they envision. As recent research on non-capitalist indigenous economic institutions in Latin America demonstrates, integrating alternative and diverse economic institutions with dominant and mainstream forms of capitalist thinking is tenuous, challenging, and often failing when scaling these practices beyond the community to enact large-scale economic or political change (Wutich and Beresford 2015). Yet, other research in post-colonial societies around the world demonstrates that, at least at the community level, diverse economic practices can have a profound impact, enabling community members to access resources,
46 secure livelihood, and continue to strive for social change (Burke 2012; Gibson-Graham and Roelvink 2011; Mitlin et al. 2007; Wutich et al. 2016, 2017;). And, of course, other capitalist community oriented growth strategies, such as America’s Black capitalism movement, demonstrate that community self-help via entrepreneurship is clearly not sufficient on its own to transform the racial divides of the South African economy
(Baradaran 2017). However, in combination with state programs of wealth transfer (like
BEE) and the possibility for new cash transfer programs (Ferguson 2015), South Africa may have the potential to demonstrate what true economic transformation could look like. As these Khayelitsha entrepreneurs demonstrate, perhaps what is important is not only alternative practices of capitalism, but also alternative understandings of what capitalism could or should be that has the potential to bring about change.
While some scholars may view the entrepreneurial visions of Khayelitsha entrepreneurs with skepticism, interpreting their optimism about entrepreneurship to be conditioned by Western market ideology, I argue that it is worth suspending our tendency to interpret these ethnographic findings through the lens of established economic theory.
Of course, there is no doubt that neoliberal entrepreneurial subjectivity, promoted by
Western development schemes, has had disastrous consequences on many local populations, and entrepreneurship, writ large, should by no means be considered a panacea for the poor. However, dismissing entrepreneurship outright as a handmaiden for neoliberalism is also unproductive. Rather, by viewing not just economic actions but also economic imaginaries with “thick description and weak theory” (Gibson-Graham
2014), scholars can recognize the glimmers of alternative ideas among our interlocutors that, given the opportunity and support, could translate into real economic change.
47 Anthropologists can play crucial roles by not only rendering explicit the diverse possibilities for alternative capitalisms, but also by investigating and understanding the conditions under which such ideas could thrive. David Graeber (2011, 47) astutely comments that, “The ultimate, hidden truth of the world is that it is something that we make, and could just as easily make differently.” But, in order to make our economic systems differently, we have to listen to the imaginative possibilities of what they could be in the first place.
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53 CHAPTER 3
RE-THINKING ENTREPRENEURSHIP THROUGH DISTRIBUTION: NON-
MARKET RELATIONS AND INEQUALITY AMONG SOUTH AFRICAN
ENTREPRENEURS
*This chapter is in preparation for submission to the Journal of the Royal Anthropological Institute
Abstract
By definition, entrepreneurship is the identification, evaluation, and execution of a market-based opportunity – an opportunity to produce profits via the market system. But as generations of anthropologists have shown, capitalism, and market activity more broadly, cannot function without the myriad of non-market exchanges (e.g. gifts, reciprocity, trade, barter, etc.) that humans engage in on a daily basis – exchanges that
Ferguson (2015) defines as distributive modes of labor. Focusing on two different groups of entrepreneurs across the racialized socio-economic divides of Cape Town, South
Africa—White entrepreneurs in the city’s central business district and Black entrepreneurs in the city’s largest township of Khayelitsha—this paper compares the non- market transactions and relations that these groups use to launch and maintain their businesses. I show how the productive capacity of entrepreneurs across these racialized class divides depends upon the distributive labor that entrepreneurs engage in among their kin and social networks, and how entrepreneurial inequality is reproduced through the unequal distributive relations that are rooted in South Africa’s colonial and apartheid history. I conclude by discussing the implications that this has for the ways that
54 anthropologists discuss the potential of distributive strategies among the poor, as well as the way that scholars and policy makers understand the economic potential of entrepreneurial practice.
Introduction
On March 3, 2015, South Africa’s Minister of Small Business Development,
Lindiwe Zulu, addressed a group of students at False Bay College in Cape Town, celebrating the opening of its new Centre for Entrepreneurship. “We must strive to be a nation of entrepreneurs and not a nation of job seekers,” Zulu told the crowd. Local media coverage of the event noted that the opening of the new center, built with financial support from the national government, was an important milestone in the government’s efforts to “unleash an entrepreneurial revolution in the country” (Dirk 2015). Three months after Minister Zulu’s remarks, Mmusi Maimane, head of South Africa’s
Democratic Alliance party, asserted in a video message to his followers, “If we can have an efficient small business culture in South Africa and a growing economy, we can ensure that we address our challenges of poverty, inequality, and ultimately unemployment…we need to stop speaking about 5 million jobs; we need to speak about 1 million entrepreneurs” (Democratic Alliance 2015).
While calls for entrepreneurs to drive post-apartheid South Africa’s long overdue economic transformation are by no means new (small businesses development has been promoted since the earliest days of the nation’s democratic transition), they are clear exemplars of larger trends within dominant economic development thinking that glorify productive economic activity as the ultimate antidote to poverty and inequality (Ferguson
55 2015). In this sense, as Zulu’s and Maimane’s remarks imply, entrepreneurs are seen as ideal productive citizens: In identifying and executing new market-based opportunities, entrepreneurs not only create their own livelihoods, but they also drive economic growth by building new businesses, expanding the market, and producing more jobs (DeSoto
1989; Naudé 2008). Yet, despite this veneration of entrepreneurs as model producers, scholars and policy experts have increasingly begun to question the utility of a sole focus on productive capacity without first considering the resources that people require to produce (Brooks 2015; Ferguson 2007; 2015; Hanlon et al. 2010; Lowery 2018). As
Ferguson (2015) notes, the material resources that a person needs to become a productive citizen (e.g. food, shelter, or money to start a business or obtain training and education) are often directly provided for (i.e. distributed) by his or her kin and social networks. In other words, he or she does not purchase these resources on the market with money earned from their productive labor; first the individual needs resources in order to produce. Ferguson (2015: 45-46) argues that despite the persistent idea that production is somehow always “primary, structured, and material,” perhaps we should reconsider the inverse and rethink analyses of economic behavior through the lens of distribution: What are the roles of the distributive resources that enable people’s productive activity?
This paper, drawing on 13 moths of ethnographic research in Cape Town’s bourgeoning entrepreneurial start-up scene, builds on these recent conversations in order to examine how entrepreneurs acquire the resources they need (i.e. the non-market distributive mechanisms) to launch and maintain their businesses. Of course, the call to pay closer attention to the non-market mechanisms through which people acquire resources is by no means novel to anthropologists. Such calls, as articulated by Ferguson,
56 are rallying cries that build on a deep history of scholarship within economic anthropology that investigates how capitalist practices are entwined with non-market modes of transfer and distribution, including gifts, barters, reciprocity, care work, etc.
(e.g. Sahlins 1994; Rosaldo 1974; Ortner 1972). As Gudeman (2012: 96) articulates, one cannot fully understand an economy without understanding both the market relations and the non-market relations of the community in which it exists. Yet, within this body of anthropological work—which largely focuses on the work of informal, small-scale artisans, vendors, and traders in marginalized economic positions—there has been little consideration of how non-market distributive relations function across socio-economic divides, examining the role of non-market distributive relations within elite and high- resource environments as well as among the poor (Browne 2004). As Gudeman (2012),
Feguson (2015), and Gibson-Graham (2008) remind us, non-market distributive relations are not unique among the poor, but rather are central to the functioning of capitalist societies writ large. But how do these distributive mechanisms operate across socio- economic resource environments, and what might these differences mean for our understandings of the role of entrepreneurship within economic development practice, especially in societies with socio-economic divisions wrought by historical legacies of colonialism, slavery, or apartheid?
To examine this question, this research analyzes differences between the non- market distributive mechanisms employed by two groups of entrepreneurs across the racialized class divides of post-apartheid, South Africa: White entrepreneurs within the central areas of Cape Town, and Black entrepreneurs Khayelitsha, Cape Town’s largest township. My findings show that while White entrepreneurs in town largely rely on
57 vertical structures of intergenerational wealth, Black entrepreneurs in Khayelitsha do not have adequate intergenerational resources to draw upon, and thus turn to lateral modes of social support to bolster their entrepreneurial ventures. By analyzing how these distributive mechanisms function across Cape Town’s socio-economic divides, I argue that (a) entrepreneurship is not simply the act of executing market-based opportunities, but rather must be seen as mobilizing distributive resources and labor to leverage the market to one’s advantage, and (b) that historical structures of economic inequality impact not only how distributive mechanisms function, but also how these distributive mechanisms facilitate productive entrepreneurial capacity. By rethinking entrepreneurship through distribution, I conclude that, far from being the cure-all for poverty and inequality that the South African government has propositioned it be, increased entrepreneurship requires greater wealth and more robust systems of social support in order to flourish across the socio-economic scale.
From Productive Labor to Distributive Mechanisms of Support: Re-thinking the Base of Entrepreneurship
To begin to re-think entrepreneurship through the lens of distribution, we must start from the assertation that entrepreneurship, as form of productive labor, is inevitably preceded by some form of unconditional and unearned distribution and care (Ferguson
2015; Gibson-Graham 2008). In other words, entrepreneurs rely upon distributive mechanisms that enable them to produce. While an anthropology of entrepreneurship remains underdeveloped as a cohesive body of work (Lundy 2017), the anthropological literature on small-scale vendors, artisans, and traders provides a fruitful starting point to
58 understand the distributive resources that entrepreneurs rely upon to enable productive capacity.vii Clark’s (1994) examination of Asante women traders in Ghana’s Kumasi
Central Market, for example, describes the assets that vendors require to start and maintain a viable business, including intangible resources such as knowledge, skills, and information, but also financial capital, labor, and transportation. These tangible resources,
Clark explains, both precede a vendor’s ability to trade in the market and remain essential for the successful continuation of trading. Clark notes (pg. 172) that while the minimum levels of financial capital and labor that Asante women needed to start their businesses were low, access to some amount of financial capital was, “just as central as the larger investment in a factory. Without reliable access to that capital…the business will collapse and must be refinanced on another basis.” Financial capital, Clark explains, not only enabled women to purchase goods to sell, but also paid for labor assistance and transportation to access markets. We see Clark’s descriptions of the distributive resources necessary for small-business activity in Kumasi echoed by other anthropological works such as Browne’s (2004) study of entrepreneurial practice in Martinique, Ta’s (2017) research on second-hand clothing traders in Hong Kong, and Joos’s (2018) examination of home-based shops in Haiti’s shotgun neighborhoods.
Despite the fact that these anthropological studies of vendors, artisans, and marketplaces make quite clear that small-scale entrepreneurs require various resources to initiate and sustain market practice, there has been little explicit analysis of how these entrepreneurs acquire such resources, presumably because, as Clark (1994) explains, the start-up costs of such business are generally low, with people relying on small amounts of savings, (informal or formal) credit, or material already in their possession to acquire or
59 produce something with which to sell. Nonetheless, Clark’s research found that about half of all women traders in her research reported that they received starting capital through kin, while the other half reported that they started trading based on their own resources. Clark (pg. 183) notes, however, that one of the women who proudly reported starting her businesses based on her own resources described receiving a gift of peanuts from a relative, which she sold to begin her business instead of keeping them as a gift. As this example demonstrates, non-market distributive mechanisms are clearly foundational to entrepreneurs’ ability to initiate businesses.
Although there are few analyses of the initial forms of capital or resources used by entrepreneurs, other scholars demonstrate the centrality of non-market distributive mechanisms to entrepreneurial practice by analyzing the variegated non-market distributive strategies that small-scale entrepreneurs employ to sustain their businesses.
For example, Rissing’s (2016) study of small-scale organic farmers in Iowa documents the ways that farmers, trying to compete with large-scale industrial farms, share specialized equipment such as harvesters, cold storage systems, and root washers. Rissing explains that, while individual farmers cannot afford such technologies, sharing equipment and trading for labor time allows them to collectively bring down their costs and better compete with big-ag. Similarly, Milgram’s (2014) fieldwork among market vendors in the Philippines highlights the ways in which women street vendors form alliances with store owners, selling the store owners’ produce in the streets along with their own products in exchange for storage space. Lundy and colleagues’ (2017) work examining entrepreneurial strategies in Guinnea-Bisseau, Clark’s (1989) research on market women in Ghana, and Estrada’s (2013) work on immigrant street vendors in Los
60 Angeles all document ways that small-scale entrepreneurs frequently rely on kinship relations for labor assistance. Additionally, work by Antrosio and Colloredo-Mansfeld
(2015) in the Andes, Little (2002) in Guatemala, and Shepherd (2008) in Washington
D.C., all document the ways that artisans and vendors rely on institutional arrangements to avoid excessive competition and collectively better position themselves to generate more profits.
Viewed together, this body of scholarship demonstrates that entrepreneurs, working with limited resources, frequently rely on solidarity-based agreements, exchanges, and transfers (i.e. distributive work) that facilitate the resources necessary for their businesses’ survival. Such ethnographic accounts of entrepreneurial practice dispel the notion that formal productive market activity is something separate from the
“informal sector” and demonstrate the ways that non-market distributive mechanisms and the productive market practices that they facilitate, produce a patchwork of informal/formal activity necessary for business survival (Guyer 2004; Browne 2004).
While these analysis of the non-market distributive strategies used by small-scale, and often informal traders and artisans have been instrumental to deeper anthropological understandings of productive economic activity, we must remember that distributive mechanisms of labor are not unique to the poor and marginalized so often studied by anthropologists, but rather are central to capitalist practice writ-large (Gibson-Graham
2008; Gudeman 2012; Ferguson 2015). Such mechanisms often go unrecognized outside of low-resource environments (Brown 2004; 2009). For example, Ferguson notes that many wealthy elites do not “earn” their livelihood by exchanging their labor for wages, but rather live off returns made on invested capital, private pension funds, and trust
61 funds. Similarly, he explains, in wealthy nation-states, parents frequently provide livelihood support to adult children; children support elderly parents; and distributive support is often given via tithing, churches, and charitable organizations. While these means of direct non-market transfers between kin and community members are clearly present across socio-economic strata there remains little analysis of the ways that distributive mechanisms function in entrepreneurship across social class and what implications this may have for entrepreneurial practice. In this paper, therefore, I investigate the distributive mechanisms used by entrepreneurs across socio-economic divides to initiate and sustain their businesses by focusing on recent entrepreneurial development efforts in Cape Town, South Africa.
Entrepreneurship as Economic Development Policy in South Africa
On May 10, 1994, Nelson Mandela was inaugurated as South Africa’s first democratically elected president and the nation officially began its quest to rectify the atrocities wrought by its colonial and apartheid past. Yet nearly 25 years later, the de- racialization of public policy has done little to close racial wealth gaps or alter the nation’s racialized geography. Scholars now largely view South Africa’s economy as a
“distributional regime” that divides the country into worlds of economic insiders and economic outsiders (Seekings and Nattrass 2005). The economic “insiders” are mainly
White, though increasingly multi-racial, and primarily live in wealthy urban centers; the economic “outsiders” are primarily under- and unemployed Black South Africans who live in urban townships and rural areas (ibid). In downtown Cape Town, for example, with its robust and globally integrated business and finance sector, residents experience
62 life similar to that of most OECD nations. In Cape Town’s townships, like Khayelitsha, the majority of residents experience extreme poverty, unemployment upwards of 60%, and a dearth of basic goods and services like plumbing and sanitation (Makhulu 2015).viii
While South Africa’s remarkably successful and peaceful political revolution has been hailed around the world, scholars and political leaders alike have characterized the nation’s (lack of) economic transition as an “elite transition” (Bond 2000), in which the lives of a small minority were greatly improved, the advantages of the rich were never reduced, and the economic prospects of the majority have been overlooked (Makhulu
2016).
The story of South Africa’s transition from political apartheid to economic apartheid is often attributed to the African National Congress’s (ANC) embrace of neoliberal economic strategies when the party took control post-1994 and began to re- build South Africa’s economic relationship with the rest of the world (Marais 2011; Peet
2002). During the struggle against apartheid, many ANC leaders were committed to socialist policies, calling for the re-distribution of wealth and resources to provide basic necessities to the nation’s poor (Elis and Sechaba 1992; Peet 2002). Leading up to the
1994 transition, however, the party quietly abandoned its commitments to socialism and yielded to pressures from dominant Western powers, opening markets and attracting investors in the “New South Africa.” Government leaders claimed that such business- friendly measures would create jobs and therefore improve living conditions for the millions of poor South Africans (Bond 2000; Ferguson 2015). While it quickly became clear that these new neoliberal policies did not create enough wage labor for all those who needed it (forcing the government to implement a series of state-led redistributive
63 welfare programs for women, children, the disabled, and the elderly [Ferguson 2007]), these pro-business policy shifts nonetheless set a tone for national economic development policy that prioritized economic transformation via market-based strategies and the creation of private sector wage-labor jobs, especially for able bodied men.
While South Africa’s focus on private sector job creation has led many scholars to characterize the nation as “neoliberal,” other scholars dispute this characterization noting the series of state regulations and programs put in place to spur market-based economic transformation (Hull and James 2012; James 2014; Ferguson 2007). For example, the nation’s Black Economic Empowerment (BEE) policies require businesses with over R10 million in revenue to rate their performance on racial inclusion, including their percentages of Black owners, managers, and workers as well as the skills development and training opportunities that companies provide for Black South Africans.ix Based on these BEE “scorecards,” the government has created incentive structures for securing government contracts and subsidies so that only companies with sufficiently high BEE score are eligible to qualify. Such policies therefore incentivize established businesses to hire and promote Black workers and managers as well as transfer corporate ownership
(partial or full) to Black South Africans in order to compete in specific sectors of the
South African economy (Iheduru 2004, 2008).
However, in addition to these state-led programs targeting established businesses, the government has heavily promoted Black entrepreneurship and the development of
SMMEs (small, medium, and micro-enterprises) since the earliest days of the democratic transition. For example, the 2007 Department of Trade and Industry’s (DTI) “Integrated
Strategy on the Promotion of Entrepreneurship and Small Enterprises” focused on,
64 “improving access to small business support and information, strengthening small business advocacy, delivering effective service and monitoring impact.” (DTI 2007).
Through this strategy, the government established several agencies with the explicit purpose of supporting the development of entrepreneurs, including the Small Enterprise
Development Agency (SEDA) and the National Youth Development Agency (NYDA).
Both agencies provide a range on non-financial support services to nascent entrepreneurs, including entrepreneurial skills development and training, mentoring, and provision of small material items and equipment needed for business (e.g. laptop computers, bicycles, wheelbarrows, etc.). In this sense, the government has taken a blended approach, using both government-led programs to foster nascent entrepreneurs as well as government incentive structures to encourage the private sector to develop programs targeted toward aiding Black entrepreneurs.
Private sector efforts to promote entrepreneurship—via government incentive structures—are largely dictated through South Africa’s BEE laws. To acquire sufficiently high BEE scores, companies with South Africa-based operations must make “corporate social investments” (CSIs), to promote skills development and training initiatives for
“previously marginalized” populations. While these CSI initiatives can take many forms, many companies are establishing and funding programs to promote entrepreneurship in
South Africa’s township communities, similar to the efforts of the government backed agencies. One way this has manifested in Cape Town, for example, is through the establishment of entrepreneurial “hubs” (co-working spaces) in the city’s townships, designed to mimic Google-like open working spaces with desks, communal computers, wireless internet, as well as a private conference room upon request. Through these
65 spaces, CSI programs also run entrepreneurial training and skills development programs to encourage township residents to become entrepreneurs. While these public-private measures of market support aimed at economic development have caused scholars to debate how to characterize South Africa’s economic policies, what is clear is that all efforts to bolster and support job creation—whether by the state or the private sector— have overwhelmingly focused on building skills and productive capacity of workers to enable them to produce their own livelihoods via the market.
Distributive Livelihoods in South Africa: Survival, Entrepreneurship, and Traditional Forms of Social Support
Although the South African state plays a present but limited role in distributive support for some citizens (children, disabled, and the elderly) (Ferguson 2015), there is a long and rich history of informal distributive strategies employed by South Africa’s township and rural populations to support and sustain livelihoods in the absence of state support. Under both colonial and apartheid rule, South Africa’s White-owned urban areas required Black labor to power their growing economies. As such, African men—both voluntarily and by coercion—migrated from rural subsistence communities to government delineated townships on the periphery of South African cities and submitted themselves to wage work that enabled them to maintain themselves and their dependents in the countryside (Bak 2008; Button et al. 2018; Ferguson 2015). While this state- controlled migration system ended even before the official democratic transition (Wells
1993), many Black South Africans have continued these urban-rural migration and remittance practices—maintaining social support networks that stretch across towns,
66 cities, and villages—as a strategy to manage their livelihoods and those of their dependents in the face of acute poverty (Spiegel 2018).
As Spiegel (2018) demonstrates, these networks of support are based on putative, not biological, kinship. As such, Spiegel argues, kinship is mobilized (and refashioned) as a cultural resource that enables people to make distributive claims on the resources of not only biological family, but also close friends, neighbors, and even acquaintances across urban and rural divides. For example, common practices of social support mobilized through these social networks include shunting children back and forth between different households depending on who may be working or who has the resources to provide; relying on one’s kin network for housing support in urban areas, often building additional shacks on family plots within townships; and young unemployed people drawing on state-given social grants for their elderly family members or sisters with children (Spiegel
2018; Neves and du Toit 2012). Black South Africans in townships and in rural areas also rely heavily on modes of informal work and entrepreneurship, such as establishing barber shops, spaza shops (small store selling basic foods and supplies), bakeries, food stalls, bed and breakfasts, etc. (du Toit and Neves 2014). These unregistered, informal businesses generally serve to supply more resources to kin networks, and do not seek to grow, expand or accumulate wealth (ibid). Rather, long-term strategies often include acquiring enough money to pay for education that will improve childrens’ earning potential, which serves to contribute greater financial resources to the family network
(Button et al. 2018; Neves and du Toit 2012).
Yet, over the past ten years, as the global narrative of rock-star Silicon Valley tech entrepreneurs has combined with increased government calls for entrepreneurship,
67 South African township communities have seen the rise of a new generation of entrepreneurs. These new entrepreneurs diverge from the informal, survivalist businesses practices of their parents’ generation in that they are building on higher levels of education (and often experience in the corporate sector) to establish formal businesses within township communities, and seeking to grow and expand these businesses into the globally integrated sectors of the South African economy (Beresford, in review). How this new generation of formal township entrepreneurs acquires the distributive resources required for their businesses, and how their distributive mechanisms with entrepreneurs in the wealthy areas of central Cape Town, however, remains largely unexamined.
Research Methods
This research draws on 13 months of multi-sited participant observation in Cape
Town’s entrepreneurial start-up scene between 2015 and 2016 and semi-structured ethnographic interviews with 41 entrepreneurs (20 Black South African and 21 White
South African). Participant observation included residence at three different entrepreneurial “hubs” (co-working spaces) in the city—working and interacting daily with entrepreneurs—in addition to attending entrepreneurial networking events, pitching competitions, workshops, and training events around the Cape Town area. Two hubs—
CoShare and IdeaLab—are located in the wealthier city bowl area of Cape Town.
CoShare was established in 2014, and IdeaLab in 2000. White South Africans make up
90% of the entrepreneurs at these hubs. The third entrepreneurial hub—The Station—is located in Khayelitsha, Cape Town’s largest township. The Station was established in
2015 and all of its members are Black South Africans. Currently, The Station is the only
68 entrepreneurial hub in Khayelitsha.x Entrepreneurs at the CoShare and IdeaLab hubs pay membership fees, while The Station runs on money from CSI investments and thus does not charge entrepreneurs.xi
To gain a more in-depth knowledge of entrepreneurs’ experiences, I recruited 20
Black South African entrepreneurs from The Station, 9 White South African entrepreneurs from CoShare, and an additional 12 White South African entrepreneurs from IdeaLab (for a total of 21 White South African entrepreneurs). Entrepreneurs in each sample represent a range of different types of businesses (e.g. technology, service, retail, financial), life circumstances (e.g. both men and women with varying socioeconomic circumstances within their communities), and stages in their business (e.g. beginning start-ups, not yet producing profits to established business with outside investment and multiple employees). I conducted interviews in English, prompting open- ended responses, including questions about various types of material and financial support entrepreneurs have used to run their ventures and cover livelihood costs for them and their dependents as well as the various ways that entrepreneurs acquired these funds and resources.xii I recorded all interviews with the consent of participants, which were then transcribed and cross-checked with the audio file for accuracy. As a professional courtesy, I compensated all of my interview participants with R200 for their time.xiii
Through inductive techniques of thematic analysis (Ryan and Bernard 2003), I first elicited all themes pertaining to non-market exchanges that entrepreneurs used to support their businesses and livelihood expenses. I then systematically compared these themes both among and across Black and White entrepreneurs in order to understand overall thematic differences between the two groups (Boeije 2002)—i.e. how these non-
69 market distributive mechanisms function differently between White entrepreneurs in town vs. Black entrepreneurs in Khayelitsha. I used informal interviews with community leaders, field notes, and follow-up conversations with key research participants to cross- check and validate my findings (Creswell and Miller 2000). To protect identity, names here are pseudonyms and businesses are described broadly.
Family Networks and Distributive Relations in a Post-Colonial, Post-Apartheid
Economy
To understand how distributive mechanisms are used by entrepreneurs across
South Africa’s racialized socio-economic divides, I begin with the stories of two different entrepreneurs: Jack, a 34-year-old White entrepreneur who works out of CoShare, and
Mbulelo, a 34-year-old Black entrepreneur who works out of The Station.
Jack’s Story
Jack was born in the early 1980s to an upper middle-class family in Cape Town.
Jack’s mother, who is South African, worked in public relations, and his father, a tobacco farmer’s son from Zimbabwe, is an entrepreneur. Jack’s father began his career fresh out of university in the 1970s as a chartered accountant, working for a company in Hong
Kong, however, he soon jumped at the opportunity to start a business manufacturing and importing plastics from China into the United Kingdom. He used his profits from that venture for other entrepreneurial pursuits back in South Africa during the 70s and 80s.
Being from an upper middle-class family and having a university education that their
70 own parents paid for, Jack’s parents raised him with the expectation that he would do well in school and go to university, which would enable him to launch his own career.
Jack’s parents paid for his private boarding school fees and for his university degree in the United Kingdom, where he majored in political science. After finishing university in the early 2000s, Jack briefly worked in London before returning to Cape Town to work for a major South African export brand.
In 2007, after two years working in Cape Town, Jack and a friend (his current business partner) recognized what they perceived to be a gap in the South African market for honey production. They decided to start a business manufacturing honey for both domestic and international sales. However, because Jack had no collateral, he could not qualify for a business loan or a personal line of credit; and because he had no entrepreneurial experience he was unlikely to attract venture capital funding. Jack, therefore, approached his father to ask if he would put up the funding required to start his business. Being an entrepreneur himself, Jack’s father agreed and gave him the initial round of financing needed to lease warehouse space and purchase 400 bee hives, bottling equipment, a delivery truck, and cover other miscellaneous start-up costs. Six years later,
Jack’s company has several major domestic and international contracts and employs over a dozen people. Jack still considers his business to be in early stages of growth and therefore is cautious about how much salary he pays himself, taking home a salary of about R500,000/year (apprx. $38,000) from his business.xiv His earnings only support himself – he is not married and has no children at this point in his life, and he has no obligation to support his parents or siblings. Thus, Jack re-invests profits back into his
71 business as he focuses on expanding to more international markets and increasing his business’ production capacity.
Mbulelo’s Story
Mbulelo grew up in the small city of De Aar in South Africa’s Northern Cape province. As he was born in the early 80’s under the apartheid regime, Mbulelo, along with his parents, and two sisters, lived in a township on the outskirts of De Aar (it was illegal for them to live in the city limits under apartheid law). His father worked at a bakery in town and his mother was a domestic worker. Mbulelo’s father moved from his family’s subsistence farm in the Eastern Cape province to De Aar in the 1970s to find wage work in order to send remittances back to his family. Since Mbulelo was his parent’s only son, he was raised with the expectation that one day he too would get a job that would financially support his parents in their retirement. Mbulelo’s parents, therefore, encouraged him to go to university and get the best education he could. They felt that, especially with new opportunities opening up for Black South Africans in the wake of the democratic transition, Mbulelo’s education would enable him to obtain a middle-class job that would better support their whole family. While they struggled financially, Mbulelo’s parents used their wages to pay the fees needed for his local government (public) school; as a strong student, he earned a bursary (scholarship) for a degree in accounting at the Cape Peninsula University of Technology in Cape Town.
In the early 2000s, Mbulelo moved to the Gugulethu township of Cape Town to attend university, living in an informal shack with extended family but, bored and uninspired, he dropped out. Mbulelo had always been interested in computers and
72 regularly fixed and set up computers and mobile phones for his friends and family. In
2010, he began to think about turning his hobby in a business and starting his own IT company. Seeing that many new businesses cropping up in Cape Town’s townships needed IT and web design services, Mbulelo envisioned growing a business that would have multiple locations throughout South Africa and provided IT services within township communities. With this goal in mind, he went back to university to earn his IT certificate. He took night courses part time while working at a furniture warehouse where he earned enough to cover his living expenses while sending small amounts of money to his parents.
In 2012, after completing his certificate, Mbulelo quit his job and formally registered his business, asking his friends and family to begin referring clients to him by word of mouth. While his start-up costs were initially very low, he soon realized that he needed more money to expand his business and make it something that could provide consistent income. For example, living in an informal shack home with no hardwired internet, Mbulelo regularly ran out of cell phone data and would have to run to the nearby internet café in order to complete work for his clients. He needed office space; a place with good internet, and where he could meet with clients and be seen as a legitimate business. But he could not afford to rent space and did not qualify for a small business loan since he had no business background, credit history, or collateral.
In 2013, Mbulelo met a new client who worked out of newly established entrepreneurship co-working space in Khayelitsha. He was intrigued by the space, but they charged a monthly membership fee, which he could not afford. Instead, Mbulelo arranged a meeting with the site manager and offered his IT services in return for space
73 on the premises. The manager agreed and Mbulelo worked out of the entrepreneurial hub until it closed in 2015. At that point he moved his business to The Station, which had just opened and was not charging for membership. While Mbulelo’s business has been very successful thus far he still does not have the money to expand, but he is saving toward this goal. He is able to pay himself approximately R60,000 a year (approximately
$5,000). While he is not yet married and does not have any children to support, he sends money each month to his parents back in De Aar to supplement their state-funded pension.
***
While entrepreneurs rely on a range of non-market distributive mechanisms to launch and maintain their businesses, Jack’s and Mbulelo’s stories exemplify the major thematic differences in the availability and functioning of the non-market distributive mechanisms used by entrepreneurs across South Africa’s racialized socio-economic divides. Among my research participants, every entrepreneur relied on some amount of non-purchased resources that were vital to not only initiating their businesses, but also to sustaining them in times of difficultly. As Jack’s and Mbulelo’s stories show, however, the structural economic realities of South Africa’s colonial and apartheid history mean that these distributive resource flows function in very different ways. While White entrepreneurs at CoShare and IdeaLab—like Jack—largely relied on intergenerational wealth and resources, Black entrepreneurs at the Station not only had very few intergenerational resources to draw on, but were also responsible for giving distributive support to their own kin networks through their income. For these reasons, as Mbulelo’s
74 story shows, Black entrepreneurs at The Station mobilized lateral modes of exchange and social support among each other and within their community to initiate and sustain their businesses. In the sections below, I describe the common ways that various forms of distributional mechanisms work among White entrepreneurs in CoShare and IdeaLab vs.
Black entrepreneurs at The Station.
CoShare & IdeaLab
As Jack’s story exemplifies, White entrepreneurs in CoShare and IdeaLab all relied on non-market distributive mechanisms to support their businesses at various points in their careers, and these resources were largely derived through intergenerational means of support. At CoShare and IdeaLab, I found that entrepreneurs relied on intergenerational means of support in three different ways: (1) to initiate a business and cover start-up costs; (2) in times of slow business or lags in cashflow; (3) when entrepreneurs made costly mistakes.
The first and most common ways that entrepreneurs at CoShare and IdeaLab relied on distributive resources was in the initial startup of their businesses. As Jack’s story indicates, many entrepreneurs at CoShare and IdeaLab turned to their families for financial assistance when deciding that they wanted to start a business. For example,
Jackie, a 31-year-old female entrepreneur at CoShare followed a similar path to Jack. She grew-up in a middle-class family in Cape Town, went to university, and after working for a few years, decided that she wanted to start a business selling her homemade almond milk. Of course, this required many upfront costs, from equipment and storage space to transportation, and of course, money to cover her living costs while she generated enough
75 business to make profits. Jackie approached her family. Her mother gifted Jackie her old car for transport; Jackie’s father gave her R9,000 to purchase equipment; and Jackie’s fiancé gave her R40,000 to rent space for her manufacturing. As Jackie was living with him and he had a job that generated good income, his earnings covered her living expenses while she got her business off the ground. Her almond milk is now sold in several major grocery store chains around Cape Town, and she intends to expand her sales into other cities in the next few years.
While Jack’s and Jackie’s business both required significant start-up costs, other businesses had “leaner” start-up capital requirements, but nonetheless still relied upon family assistance. For example, Celestine, a 30-year old female entrepreneur working out of IdeaLab, is working with her husband to develop a web app that connects and facilitates the hiring of service workers in South Africa. As a web-based business, their startup costs have been relatively low, and because Celestine’s husband is a software engineer by training, they have not had any software development costs (usually the largest expense for web-based businesses). While they sold their house and a car (both purchased while they were working in corporate salaried jobs) to invest that capital in their business, they knew that monthly rent would quickly drain their savings, so they moved in with Celestine’s grandmother-in-law. Not only are they able to live rent- and utility-free, but many of their everyday costs for living, such as food and household items, are also covered, allowing them to focus their financial resources on their business.
Although many entrepreneurs at CoShare and IdeaLab relied on distributive support from their families to initiate their businesses, it was also very common for entrepreneurs to rely on their families in times of slow business or lags in cashflow. For example, Greg,
76 a 31-year-old male entrepreneur working out of IdeaLab, was able to start his data visualization business with a significant amount of savings he accumulated from working a corporate job. While his business has been going for two years now and is doing well, he occasionally runs into problems with cash flow when one of his clients takes too long to pay him. That month, he had two contracts that were overdue—he had finished the work, but his clients still had not paid. Greg, however, needed to pay his membership fees at IdeaLab that month and was working on his next project for a new client which required upfront spending on his part. This situation is fairly common for Greg, and when it occurs he approaches his father for informal “bridge financing.” His father loans him the money that he needs to settle his accounts, and Greg then pays his father back several weeks later when his payments finally come through. “Cash flow is a massive issue,” he explained. “Most entrepreneurs focus on revenues, but not having the cash flow when you need it is a big problem.” While Greg considered himself fortunate to be able to rely on his own money for most of his needs, he depended heavily small, quick, informal loans from his family, who were happy to help support him and his business in whatever ways they could. Other entrepreneurs reported turning to their family to borrow money during times of slow business, especially during the Christmas holidays when it was difficult to line up contracts or drum up new business. These short-term, informal loans from family allowed entrepreneurs to keep moving forward with their businesses, usually without worry, knowing from experience that more money would be coming in soon.
Finally, entrepreneurs at CoShare and IdeaLab also discussed ways that they turned to their families for distributive means of support as a safety net when they made costly business mistakes. For example, David, a 38-year-old entrepreneur at IdeaLab who
77 started a software development company generated much excitement for his business idea in 2013 in Cape Town’s tech startup scene. He pitched his business idea to several venture capitalists, seeking funding in order to hire and pay for software developers and equipment. One venture capital firm offered him funding, but, as with most venture capital deals, it was given in exchange for equity in his company. As David’s business grew and became successful, he regretted not having full financial control of his company. Thus, he began to use his profits to buy back equity. However, to regain majority control was too costly. He therefore approached his parents, asking them if they could purchase shares in his company. Now, between him and parents, David has regained majority control of his business. Eventually, David says, the shares in his business will be part of his inheritance from his parents, but in looking back he wished that he had found other avenues to acquire his initial start-up funding. Other entrepreneurs, like David, turned to their families in the wake of costly business mistakes.
Some borrowed money directly from their families, while others had their parents put up collateral and co-sign on business loans when they needed money.
During my time at CoShare and IdeaLab, I found that these informal distributive arrangements—relying on family for financial or material help and assistance—were so common place that entrepreneurs often had a hard time recalling such events as integral assistance to their ventures. While by no means uniformly wealthy, all entrepreneurs in
CoShare and IdeaLab often recognized themselves as privileged and economically comfortable, especially by South African standards. In recalling the ways that they depended on and could turn to their families for financial and material support, they openly recognized their good fortune, acknowledged that entrepreneurs in the townships
78 often did not have the same avenues of support, and conceded that the lack of these avenues is one of the major factors that makes entrepreneurship more difficult for Black
South Africans. As Jack said, “I come from a privileged background, so especially in the context of South Africa, I recognize the advantages I have.”
The Station
While White entrepreneurs at CoShare and IdeaLab largely relied on intergenerational distributive networks to support their businesses, Black entrepreneurs at
The Station—as Mbulelo’s story indicates—could not say the same. This is not to say that entrepreneurs at the The Station did not rely on their family networks for distributive resources. When families had resources to give, they gave what they could. Most often, this manifested in the form of housing assistance. For example, Kabelo a 28-year-old entrepreneur at The Station, has never received financial assistance from his family for his business that runs sports camps for township children, but he was given a house by his father when he turned 18. The house is a small, two-room cinderblock constructed home, which enables Kabelo to live rent free along with his housemate. Some entrepreneurs lived in informal shack homes built in the yards of extended family (like
Mbulelo), and others lived in family homes in Khayelitsha (often with their siblings) owned by their parents who had moved back to rural areas in their retirement.
Another vital mode of distributive support for entrepreneurs at The Station were small amounts of funding and resources provided by government entrepreneurial development programs and private CSI initiatives aimed at spurring Black entrepreneurship. Of course, The Station itself (run on CSI funds) provided material
79 support to all its members, not charging membership fees for use of its office space and wireless internet. Any community resident with a formally registered business could apply for membership at The Station. And while The Station did not provide any financial support for entrepreneurs, they did host “pitching competitions” in which other
CSI initiatives gave away small amounts of funding to the winning entrepreneurs. For example, Nselo a 29-year-old entrepreneur at The Station became quite a well-known entrepreneur in Khayelitsha—having been profiled in the Cape Argus newspaper—after winning several pitching competitions for small amounts of seed funding (apprx. R5,000) from companies like Red Bull and South African Breweries for his community recycling business. In developing his initial business ideas and preparing for the competitions,
Nselo was able to request funding for a laptop computer from the South African
Department of Trade and Industry’s Small Enterprise Development Agency (SEDA).
Many other entrepreneurs at The Station were able to acquire the small materials that they needed for their businesses—e.g. laptop computers, bicycles (for a bicycle delivery service), cleaning equipment (for a cleaning service business), etc.—through SEDA and the National Youth Development Agency (NYDA).
The resources that entrepreneurs acquired through these avenues were vital to enabling them to start businesses, however, as these examples show, the resources were small in comparison to many of the business start-up costs of White entrepreneurs at
CoShare and IdeaLab. Many entrepreneurs at The Station, in fact, abandoned business ideas that were too costly in favor of developing ones that had more manageable start-up costs based on the material support available to them. For example, Jason, a 36-year-old entrepreneur at The Station who runs a cleaning and catering business, initially wanted to
80 start a children’s clothing company in Khayelitsha, manufacturing clothes designed by women in Khayelitsha. He quickly realized he could not acquire the start-up capital necessary for any form of manufacturing. Similarly, Mary, a 29-year-old entrepreneur at
The Station abandoned her idea to start a line of designer handbags due to the overhead costs in favor of starting an IT business that develops web-based apps. Both Jason and
Mary were able to initiate their new “leaner” business ideas with support from SEDA –
Jason was able to purchase cleaning supplies and catering equipment, and Mary was able to purchase laptops.
While these small amounts of distributive resources from families and institutions were vital to entrepreneurs at The Station, they were often insufficient to cover all of their distributive needs. As the experiences of entrepreneurs at CoShare and IdeaLab indicate, running a business often requires readily-available pools of cash to draw on in times of need. With these resources not readily available to them, entrepreneurs at The Station frequently turned to lateral modes of distributive social support among the community and one another. These lateral modes of support manifested in three different ways: (1) forming alliances with business partners who maintained salaried or wage-labor positions; (2) pooling among and exchanging resources between other entrepreneurs; (3) relying on generosity of community members and neighbors in times of need.
One the most common ways that many entrepreneurs at The Station ensured that they had the resources necessary to initiate and maintain they businesses was by forming business partnerships with other individuals who maintained wage labor or salaried positions. For example, Christine, a 32-year-old entrepreneur at The Station who started a
SharePoint consulting firm, has two other business partners. The three of them started the
81 company together in 2011. Christine decided to leave her position working in human resources for a company in Cape Town, in order to focus her efforts full time on their business, but her two partners have each maintained their jobs working for IT companies
– one in downtown Cape Town, and the other in central Johannesburg. Once their company has grown enough, they plan for their other two partner to leave their jobs to focus on growing the company. Such arrangements were common. During my time at
The Station, in everyday chit-chat about the different members and businesses, I was told about some entrepreneurs who went back to work in wage labor positions and put their enterprises on hold while they worked to acquire more capital.
In addition to acquiring capital through strategic partnerships, entrepreneurs—like
Mbulelo—frequently pooled and exchanged resources and services with one another. As
Tandiwe, a 28-year old entrepreneur who runs a computer education business, explained to me one afternoon, “You need to have connections amongst yourselves as entrepreneurs…if there’s a certain service that you need, instead of going to town and being charged expensively you can just ask someone who’s around the community.” For example, Lwazi, who runs a financial consulting business, was looking for ways to do marketing and attract new clients. Rather than paying for a stall at the local market, he approached Matt, another entrepreneur at The Station who already had a market stall at the local Khayelitsha mall. He asked Matt if he could put some of his flyers at his stall and stand around at the stall for a few days to recruit and to talk to people about his business. In exchange, Lwazi offered to look over Matt’s yearly finances and give him advice for next year’s financial planning. Other exchanges that I documented during my field work included trading web design services for tax preparation services; fixing a
82 computer to borrow a digital camera; editing a business proposal for borrowing a car; graphic design work for loaning sound equipment. As Tandiwe explained to me one afternoon, “we’d rather focus more on partnerships than to wait for funding…that’s how we are able to actually survive as Black people.”
Finally, all entrepreneurs at The Station lamented the difficulties of times when business was slow, clients didn’t pay their bills, or unforeseen expenses arose. As
Christine told me one afternoon, “You know,” she told me, “I grew up with far less than what I have now so I’m not gonna have sleepless nights because I’m running out or I can’t afford to pay that. It’s just money at the end of the day. As long as you can still live another day to come up with a different plan if Plan A didn’t work, Plan B can work in your favor.” She went on to explain that while she had been able to draw a salary from her business for the past three months, her contracts had slowed down, and she wasn’t sure if she would be able to draw a salary for herself in the upcoming months. But, she said, “the township gives you certain ways of handling situations that would freak a lot of people out when it comes to finances. I often have to ask for favors.” These favors, asked of friends, family, and neighbors—a meal here, a bus fare there—are part of the lived reality of township life in South Africa. For example, Lwazi explained that during one of the leanest months of his business, “I was depending more on people assisting me. If I go to your house and then you’re cooking, lucky for me you will dish out for me, then
I go and sleep.” These forms of gifts and transfers in the township, which are well documented in the ethnographic literature on township livelihood strategies, were vital for entrepreneurs in struggling times.
83 Conclusion: Distributive Relations, Entrepreneurship, and the Perpetuation of
Economic Inequality
Entrepreneurship has been increasingly mobilized in Western economic development thinking as the ideal form of productive labor in which individuals act upon market-based opportunities that enable personal socio-economic mobility as well as cumulative macro-economic growth. Yet, as decades of anthropological work show, human productive capacity always exists in relation to distributive modes of resources and care work. As Ferguson (2015: 45) states, “before a man can produce, he must be nursed…the receipt of unconditional and unearned distribution and care must always precede any productive labor.”
In this article, I build on this long history of anthropological scholarship to examine the distributive mechanisms that allow entrepreneurs across the socio-economic divides of post-apartheid South Africa to launch and maintain their businesses. By examining how these distributive mechanisms work in different socio-economic environments, this research demonstrates, first, the centrality of distributive mechanisms to the practice of entrepreneurship, showing that entrepreneurship is not simply the act of executing market-based opportunities, but one of mobilizing distributive resources and labor to leverage the market to one’s advantage.
More importantly, however, this research demonstrates how historical structures of economic inequality, rooted in colonial and apartheid legacies, impact not only how distributive mechanisms function, but also how these distributive mechanisms facilitate productive entrepreneurial capacity. While White South African entrepreneurs at
CoShare and IdeaLab regularly draw on distributive resources generated through
84 intergenerational wealth—using these financial and material resources both as springboards and safety nets, Black entrepreneurs at The Station have few intergenerational resources to draw upon. As such, they mobilize a range of lateral non- market distributive strategies—from abandoning costly business goals, to pooling and trading resources among one another, to relying on community generosity in times of need. These lateral modes of distributive support are well documented in the ethnographic record on livelihood strategies among South Africa’s poor (Habib and
Maharaj 2008; Neves and du Toit 2012; Spiegel 2018), yet this research shows how such strategies are mobilized not only to survive, but also to establish and grow a new generation of formal businesses in South Africa’s townships (see Beresford, in review).
Furthermore, in understanding how the distributive mechanisms that support entrepreneurship function across different socio-economic environments this research has important implications for the ways that anthropologists understand the potential uses of distributive labor and resources. First, this research contributes to anthropological research on informal and non-market modes of livelihoods within market economies by demonstrating how entrepreneurs mobilize distributive mechanisms to both initiate and sustain businesses. As such, my findings among entrepreneurs in Khayelitsha echo
Antrosio and Colloredo-Mansfeld’s (2015) argument that those who are often considered marginalized from the global economy do not use such strategies to merely eke out an existence, but rather, they see these strategies as key to “making it big” – to growing businesses and establishing a presence in national and international markets. As Christine told me one afternoon, “For our generation, we don’t want to be just a township business,” she continued, “we want to play in the big leagues.” The non-market
85 distributive strategies employed by entrepreneurs at The Station, thus, are not simply
“traditional modes of social support” (Wright et al. 2014), but rather, they are strategies mobilized to grow businesses into more profitable ventures. As Lwazi said, “Whatever cent we use, it has to take us to another level.”
Statements like those from Lwazi, however, representing the variegated survivalist strategies of the poor, however, have increasingly been used to support economic deregulation and the retreat of welfare programs as policy makers view informal distributive practices among the poor as has having the potential to springboard people into formalized entrepreneurial work (Browne 2009; Elyachar 2002; Ferguson
2015). As Elyachar (2002: 499) articulates, anthropological work on the non-market survival strategies employed by marginalized populations has “played more than a midwife’s role” in providing the fodder to justify neoliberal policies that rolled back government and other institutional distributive support mechanisms. As Browne (2004:
49) explains, in “discovering” the informal economy and the variegated strategies that the poor and marginalized employ to support their livelihoods, the international development community, almost overnight, reframed the poor as potential entrepreneurs, simply needing the state and regulations to get out of the way and allow them to unleash their productive potential.
Yet, as my analysis of the distributive mechanisms used by entrepreneurs at
CoShare, IdeaLab, and The Station demonstrates, this could not be further from the truth.
In comparing the intergenerational distributive networks that White, middle-class South
African entrepreneurs rely upon with the lateral networks employed by Black entrepreneurs in Khayelitsha, we can see that, through the lens of distribution,
86 entrepreneurs do not require fewer resources and modes of support from the state or other institutions, but rather, their entrepreneurial capacity derives from distributive support they have available. As such, my research shows that in re-thinking entrepreneurship through the lens of distribution, we can see that the productive creativity and ingenuity of entrepreneurial practice is unleashed with greater wealth and more robust systems of social support, rather than serving as an avenue to achieve those goals.
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91 CHAPTER 4
CULTURAL CAPITAL AND THE REPRODUCTION OF ENTREPRENEURIAL
INEQUALITY: COMPARATIVE EVIDENCE FROM CAPE TOWN, SOUTH AFRICA
*This chapter is currently under review in the journal Socio-Economic Review.
Abstract
Despite rhetoric that becoming an entrepreneur is a viable path for anyone, entrepreneurial failure is ubiquitous, especially among entrepreneurs from historically marginalized populations. In this study, I take a comparative ethnographic approach to examine the entrepreneurial challenges faced by two different groups of entrepreneurs in
Cape Town, South Africa: White entrepreneurs in the city center and Black entrepreneurs
Cape Town’s largest township. My research asks: (1) how do Cape Town entrepreneurs use various forms of capital – financial, social, and cultural – in the entrepreneurial process and (2) what form(s) of capital poses the greatest obstacles for entrepreneurs. By examining how entrepreneurs rely upon financial, social, and cultural capital my findings highlight the central role that cultural capital plays in entrepreneurship, how entrepreneurs mobilize social and financial capital acquire cultural capital, and how, through this process, cultural capital presents significantly higher barriers to entrepreneurs from populations who are marginalized from dominant entrepreneurial environments and networks.
92
Introduction
In today’s economy, the entrepreneur is an economic hero. As ideologies of deregulation, market integration, and privatization persist across the globe, political leaders and individual citizens alike praise entrepreneurship not only as an engine of economic growth, but also as a path to reduce inequality, address unemployment, and promote individual economic empowerment (Audretsch 2006; Bruton et al. 2013; Jansen
2016). These calls are especially prominent in post-colonial societies with significant gaps in wealth distribution where leaders promote entrepreneurship as a way for the poor to “catch up” and generate their own economic success (Levine and Rubenstein 2017;
Naudé 2011; UNDP 2004). Yet, despite rhetoric that becoming an entrepreneur is a viable path for anyone, entrepreneurs experience incredibly high failure rates (Mantere et al. 2013; McGrath 1999; Lerner and Malmendier 2013), especially those from historically marginalized populations—the very same populations that supposedly gain the most from new entrepreneurial engagements (Austin 2016; Levine and Rubenstein
2017)
In this paper, I present evidence to help address a central question to entrepreneurship research: If entrepreneurship is fundamentally egalitarian—open and available for anyone with innovative ideas (Schumpeter 1934)—why do certain groups of entrepreneurs fail more often than others? Recent work by Levine and Rubenstein (2017) demonstrates that, in the United States, successful entrepreneurs (those with formal businesses generating livable earnings) are more likely to be White, male, better educated, and from higher-earning two-parent families. White-owned firms generate
93 higher revenues than firms owned by people of color, and twenty-four percent of firms owned by White men employ at least one other person, compared to eleven percent for
Hispanic owned firms and only four percent for Black owned firms (Gorman 2017).
While scholars of “ethnic entrepreneurship” note the marked entrepreneurial success of ethnic immigrants in high-income Western countries—largely due to financial and social resources facilitated by co-ethnic networks (Light 1972; Portes and Rumbaut 2006)—this work overwhelmingly examines businesses within ethnic enclaves and does not account for entrepreneurs of color (immigrant or native-born) attempting to establish firms beyond immigrant communities. In fact, recent findings show significantly lower levels of entrepreneurship among native-born people of color vs. immigrants of color (Gorman
2017). Statistics like these have piqued interest in understanding the unique entrepreneurial challenges faced by non-white (and non-male) entrepreneurs in economies dominated by White-owned businesses (Austin 2016; Darrity et al. 2018;
Ozkazanc-pan and Muntean 2017; Tippet et al. 2014).
The factors that lead to entrepreneurial success (or failure) have long been of central concern to entrepreneurship researchers, but the dominant literature of the field largely focuses on generic barriers or obstacles to the entrepreneurial process, with entrepreneurs conceptualized as a homogenous group of economic actors. While this literature has not produced a cohesive theory to explain entrepreneurial success (or failure), scholars do agree that access to financial capital is fundamental to starting and growing a business (King and Levine 1993). And indeed, recent scholarship examining entrepreneurial inequality demonstrates that businesses owned by people of color in
White-dominated economies are significantly undercapitalized (AEO 2018; Austin 2016;
94 Darity et al. 2018; Olawale and Garwe 2010; Ramukumba 2014; Tippet et al. 2014).
However, entrepreneurship scholars are also increasingly examining the many non- material or non-financial factors that are essential to the entrepreneurial process, including forms of social capital (i.e. networks of relations) and cultural capital (i.e. knowledge, tastes, and dispositions). How historical structures of power and subjugation
(re)create unequal access to and/or use of these non-material capitals among different groups of entrepreneurs has yet to be fully explored.
In this study I take a comparative ethnographic approach to examine the entrepreneurial challenges faced by two different groups of entrepreneurs in very different social positions due to historically racialized structures of inequality in Cape
Town, South Africa: White entrepreneurs located in the wealthy city center and Black entrepreneurs located in Khayelitsha, Cape Town’s largest township. My research asks:
(1) how do Cape Town entrepreneurs use various forms of capital – financial, social, and cultural – in the entrepreneurial process and (2) what form(s) of capital do entrepreneurs view as the greatest obstacles to their entrepreneurial success. By examining the ways that these two groups of entrepreneurs use and rely upon financial, social, and cultural capital, my findings highlight the central role that cultural capital plays in the entrepreneurial process, how entrepreneurs mobilize both social and financial capital to acquire cultural capital, and how, through this process, acquiring the “correct” cultural capital presents significantly higher barriers to entrepreneurship for populations who are marginalized from dominant entrepreneurial environments and networks.
95 Theoretical Review
Towards an embedded perspective of entrepreneurship
Research on entrepreneurship has long privileged theories from economics and management that conceptualize obstacles to entrepreneurial success as objective entities to be overcome or avoided, or to be reconciled through policies that alter the entrepreneurial environment (Amit and Muller 1995; Ardichvili et al. 2005). More recently, however, scholars argue that the entrepreneurial process is not a stable or fixed entity in which objective barriers can be easily overcome or removed, but rather is a socially embedded process, entangled with existing social structures including gender, race, and socio-economic power relations (De Clercq and Voronov 2009a; Herrmann
2010; Jack and Anderson 2002; Marques 2017; Valdez 2011). An embedded approach to entrepreneurship recognizes the dialectical relationship through which the entrepreneurial process and society make and re-make each other: As human agents, entrepreneurs internalize the larger social relations and cultural values of their society, which shapes the ways that they go about making decisions and acting as entrepreneurs; in turn, their actions re-make and reinforce the social and structural relations in which entrepreneurs are embedded. Conceptualizing entrepreneurship in this way enables researchers to highlight the multiplicity of social relationships entangled in entrepreneurship and to demonstrate that entrepreneurial success or failure cannot simply be attributed to specific mindsets or environmental conditions (Jennings et al. 2013). In this way, embedded approaches to entrepreneurship take a dynamic perspective that accounts for the diversity of institutional relationships and arrangements in different social contexts.
96 Diverse capitals facilitating entrepreneurship
Embedded approaches to entrepreneurship draw from a variety of social theorists, but Pierre Bourdieu’s (1984, 1986) theory outlining diverse forms of capital has become a leading framework for scholars to analyze the embedded nature of the entrepreneurial process (DeClercq and Voronov 2009a, 2009b; Kim et al. 2006; Pret et al. 2016).
Bourdieu (1986) proposed that in any given society, individuals work to acquire various forms of capital needed to secure a dominant social position. Capital, therefore, consists of more than just money and tangible assets (i.e. financial capital). Social capital (e.g. interpersonal connections) and cultural capital (e.g. knowledge, tastes, dispositions) play equally important roles for people to acquire and/or maintain positions in social hierarchy. By articulating these different forms of capital and the ways that people convert one type of capital into another, Bourdieu argued that economic actions are intricately interwoven with social relations and are not a separate sphere of life.
While the entrepreneurship literature has always paid significant attention to ways that (unequal) access to financial capital presents significant barriers to entrepreneurial entry and success (Coleman 2000; Cooper et al. 1994; Klingler-Vidra 2016), scholars inspired by Bourdieu now pay close attention to the other forms of capital that entrepreneurs rely upon. For example, research on social networks highlights the ways that entrepreneurs mobilize social capital to gain resources through relational networks, thus giving those entrepreneurs with more robust networks competitive advantage (see
Gedajlovic et al.’s 2013 review). However, despite the increased emphasis on social capital in both academic scholarship and in entrepreneurial training, researchers point to limitations of the social networks literature because it neglects the role of cultural capital
97 in the entrepreneurial process. These critiques note that, as with financial capital, social capital cannot be understood in isolation from other forms of capital used by entrepreneurs, and, thus call on scholars to bring analysis of culture into their analytical frameworks (Light and Dana 2013; Jack and Anderson 2002).
Forms of cultural capital
While entrepreneurship scholars have always tacitly acknowledged that culture plays an important role in entrepreneurship (Kim et al 2006; Lee and Shaw 2016; Shane and Venkataraman 2000), studies often regard culture as an exogenous variable (e.g.
Amit et al. 1995; Ardichivili et al. 2003). Alternately, scholars who do incorporate analysis of culture in entrepreneurship research frequently use one-dimensional proxy measures such as a background in family business (Kim et al. 2006), an understanding of entrepreneurship as desirable career path (Light and Dana 2013; Herrington et al. 2017), or prior knowledge of entrepreneurship (Arentz 2013; Marques 2017). In noting the common ways that culture is narrowly operationalized in entrepreneurship research, many researchers acknowledge that the diffuse and all-encompassing nature of culture as a concept makes it difficult to capture and measure—a likely reason that culture is often sidelined and/or oversimplified in large-scale survey studies (De Clercq and Voronov
2009a; Lee and Shaw 2016; Pret et al. 2016).
By conceptualizing culture as a form of capital, however, Bourdieu (1986) provides a robust framework for operationalizing the culture concept in entrepreneurship research. In breaking cultural capital into three forms—institutionalized, objectified, and embodied—Bourdieu demonstrates the ways that individuals mobilize cultural resources,
98 specifically, for social advantage (see Table 1). Institutionalized cultural capital
(sometimes referred to as symbolic capital) refers to publicly recognized certifications and credentials that signify knowledge, experience, and trustworthiness (e.g. educational diplomas and certificates as well as previous work experience at highly regarded businesses or organizations). Objectified cultural capital includes material goods and objects that signify key values and attributes of one’s cultural knowledge and/or group belonging (e.g. the type of clothing that one wears, the type car one chooses to drive, or even the area codes on phone numbers or zip codes that signify where one lives). Finally, embodied cultural capital encompasses one's knowledge, dispositions, values, and tastes, as well as biophysical mannerisms of speech, dialect, and body language. As Bourdieu
(1986, pp. 18) explains, the accumulation of embodied cultural capital involves what we think of as “cultivation” and presupposes a “labor of inculcation and assimilation” that
“costs time, which must be invested personally by the investor.” Unlike money, property, or titles, embodied cultural capital cannot be bought or otherwise instantly exchanged and, therefore, exists as one of the most salient forms of capital that upholds existing social hierarchies (ibid).
Cultural capital and structures of entrepreneurial power
Although a growing number of entrepreneurship researchers incorporate
Bourdieu’s notion of cultural capital in their analyses, studies that examine how cultural capital interacts with both social capital and financial capital are scant. Several recent works that do specifically incorporate the concept of cultural capital, however, reveal the importance of cultural capital in the entrepreneurial process. For example, in noting the
99 low rates of entrepreneurship but high rates of social capital in indigenous communities in Alaska, Dana and Light (2013) argue that social capital, by itself, cannot predict entrepreneurial success. Rather, a culturally engrained ethos of entrepreneurship as a desirable vocation (cultural capital) is first necessary to take advantage of social capital.
Pret and colleagues (2016) similarly demonstrate the importance of cultural capital in entrepreneurship, explicating how small-scale craft entrepreneurs convert their craft skills and knowledge (cultural capital) into financial capital by selling their products in the market. Lee and Shaw (2016) examine cultural capital among professional and non- professional entrepreneurs in the United Kingdom (i.e. entrepreneurs with and without professional experience), noting that the cultural capital that professional entrepreneurs hold from their experience and background give them a competitive advantage in launching their ventures to their non-professional counterparts.
While such studies shed welcome light on the ways that cultural capital is essential to entrepreneurship, empirical research on cultural capital in this vein has been lacking in two key ways: (1) by largely relying on analyses of entrepreneurs within homogenous cultural contexts (c.f. Lee and Shaw), and (2) by not operationalizing the broad construct of cultural capital into constituent parts, e.g. embodied, objectified, and institutional forms of cultural capital (c.f. De Clercq and Voronov 2009a, 2009b).
Scholars, therefore, have yet to examine how specific forms of cultural capital interact with each other and with social and financial capital, and, more importantly, how acquiring these different forms of capital relies upon and reproduces structures of power embedded in different entrepreneurial contexts.
100 In this study, I seek to address these gaps in the literature by comparing the ways that two different groups of entrepreneurs with historic power differentials—White entrepreneurs in Cape Town, South Africa and Black entrepreneurs in Khayelitsha, the city’s largest township—use different forms of capital (embodied, objectified, and institutionalized cultural capital as well as financial and social capital) and which forms of capital pose greater challenges in the entrepreneurial process.
Research Setting
Over the past ten years, the South African government has aggressively promoted entrepreneurship as a means to address unemployment and economic inequality.
Embracing small business development since the earliest days of the 1994 democratic transition, South Africa’s National Development Plan for 2030 outlines entrepreneurial training and other key support mechanisms for entrepreneurship as key pathways for economic growth.
Despite these government initiatives, however, South Africa has one of the highest entrepreneurial failure rates in the world, with 75% of new ventures failing to become established businesses (Olawale and Garwe 2010; Herrington et al. 2017).
Scholars largely attribute this gap between the relatively strong nature of the South
African economy and the high failure rates of entrepreneurs to the persistence of extreme economic inequality stemming from apartheid (Seekings and Natrass 2005; Luiz 2011).
The government’s entrepreneurship development efforts are therefore heavily geared toward promoting Black entrepreneurship, with the goal of enabling Black South
Africans to “catch up” and integrate with the rest of the South African economy (Bond
101 2000; Herrington and Kew 2010). While some scholars view these efforts as successful, noting that Black South Africans make up 75% of South Africa’s entrepreneurial population (Herrington et al. 2017), others disagree, pointing out that only 1.4% of the total Black South African population are entrepreneurs compared to 7.5% of the total
White South African population (Luiz 2002). Additionally, as the size of an established business increases, the percentage of Black entrepreneurship decreases (Luiz 2002), demonstrating that, while Black South Africans are increasingly starting new entrepreneurial ventures, these ventures appear to be more likely to fail and less likely to grow into large established firms.
In combination with these entrepreneurship development efforts, the South
African government has instigated a series of policies known as Black Economic
Empowerment (BEE). As a form of affirmative action, BEE laws require businesses to be rated on their performance in racial inclusion, including the percentage of Black owners, managers, and workers as well as the skills development and training opportunities that companies provide for Black South Africans, known as Corporate Social Investments
(CSIs). Based on these BEE “scorecards,” the government has put in place an incentive structure for securing government contracts so that only companies with a sufficiently high BEE score are eligible for government contracts and subsidies. BEE laws do not affect most nascent entrepreneurs – Black or White – because only companies with a turnover of more than R10 million a year must report BEE metrics. However, BEE indirectly affects nascent entrepreneurs in two major ways: (1) BEE has incentivized many large private companies in South Africa to invest in entrepreneurial training in
Black communities as part of their Corporate Social Investment required for their BEE
102 scorecards (Iheduru 2004). And (2) there is anecdotal evidence to suggest that BEE might lead to an increasing awareness of entrepreneurship as a viable and/or desirable career path for Black South Africans as young Black South Africans see newly established
Black business leaders who have benefited from BEE initiatives (Luiz 2011).
Despite these government initiatives designed to foster Black entrepreneurship,
South Africa’s business sector remains astonishingly unequal and dominated by White
South Africans. For example, a recent study estimates that 10% of all South Africans— the majority White—own 90% of all South Africa’s wealth, while 80% of all South
Africans—the majority Black—possess no capital assets whatsoever (Orthofer 2016).
This is reflected in the fact that while the official South African national unemployment was 26% in 2014, the unemployment rate for Black South Africans vs. White South
Africans was 40% vs. 8%, respectively, and estimates of actual unemployment (as opposed to numbers reported by the government) are as high as 60-70% for certain segments of South Africa’s Black population (Herrington et al. 2017). Research consistently demonstrates that the majority of Black South Africans work in low-skilled, low-paying wage jobs, while the majority of White South Africans work in higher skills jobs in the business and service sectors (Bond 2000; Seekings and Natrass 2005). As apartheid geography remains an everyday reality, the majority of urban Black South
Africans live in informal housing in townships on the outskirts of the nation’s cities with inadequate access to water and basic services, while urban White South Africans live in central areas of the city and the well-off immediate surrounding suburbs (Makhulu 2015).
While scholars agree that Black South African entrepreneurs face significant obstacles, including inadequate access to education, training, and start-up capital
103 (Ramukumba 2014), this research rarely situates Black entrepreneurs within the broader context of South Africa’s entrepreneurial environment in order to examine systematic inequalities embedded in the entrepreneurial process.
Research Methods
To understand how Cape Town entrepreneurs mobilize different forms of capital and which forms of capital pose more significant challenges to entrepreneurs across
South Africa’s historic racial and socio-economic divides, this comparative ethnographic research draws on 13 months of multi-sited participant observation in Cape Town’s business environment between 2015 and 2016 and semi-structured ethnographic interviews with 41 entrepreneurs (20 Black South African and 21 White South African).
Participant Observation Data
Participant observation included residence at three different entrepreneurial
“hubs” (co-working spaces) in the city—working and interacting daily with entrepreneurs—in addition to attending entrepreneurial networking events, pitching competitions, workshops, and training events. Two hubs are located in the wealthier city bowl and in immediate surrounding suburbs of Cape Town (which I collectively refer to as “city bowl hubs”). White South Africans make up 90% of the entrepreneurs at these hubs. The third entrepreneurial hub is located in Khayelitsha, Cape Town’s largest and fastest growing township. The population of Khayelitsha is 99% Black South African, and the Khayelitsha hub is populated by 100% Black South Africans. Entrepreneurs located in the two city bowl hubs pay fees to belong to the co-working space, while the
104 Khayelitsha hub is run by a non-profit organization that aims to promote entrepreneurship in South Africa’s underserved communities and therefore does not charge membership fees. I collected data as field notes and records of informal and open-ended interviews with entrepreneurs, community leaders, entrepreneurial educators, and leaders of NGOs and corporate CSI initiatives that promote entrepreneurship. Participant observation enabled me, first, to build rapport with research participants and increase the validity of interview data, and second, to crosscheck my interview results with field notes, ensuring both internal and external validity of my findings (Spradley 2016; Creswell and Miller
2000).
Semi-structured Interviews
To gain a greater in-depth knowledge of entrepreneurs’ experiences, understandings, and challenges, I recruited 20 Black South African entrepreneurs from the Khayelitsha hub, 9 White South African entrepreneurs from the first city bowl hub and an additional 12 White South African entrepreneurs from the second city bowl hub
(for a total of twenty White South African entrepreneurs). My purposive sampling strategy ensured a broad range of experiences and types of entrepreneurs in order to capture the depth and breadth of themes in the study population (Guest 2014).
Entrepreneurs in each sample represent a range of different types of businesses (e.g. technology, service, retail, financial), life circumstances (e.g. both men and women with varying socioeconomic circumstances within their communities), and stages in the establishment of their business; additionally, every entrepreneur interviewed reported having at least one failed or abandoned entrepreneurial idea prior to their current venture.
105 As a professional courtesy, all interview participants received R200 (approximately $15) for their participation upon completing the interview.
I conducted interviews in English, which lasted from sixty minutes to three-and-a- half hours, the average interview lasting two-and-a-half hours. My questions elicited open-ended responses to a variety of topics on entrepreneurship, including their entrepreneurial background and history; their own entrepreneurial successes and failures; their greatest challenges as entrepreneurs; and how they overcome (or fail to overcome) these challenges. I recorded all interviews with the consent of participants, which were then transcribed and crosschecked for accuracy. To maintain anonymity, I have used pseudonyms and businesses have been described broadly.
Data Analysis
After structurally coding the transcripts to allow for systematic comparison
(Bernard et al. 2015), I identified five codes—financial capital, social capital, institutional cultural capital, objectified cultural capital, embodied cultural capital—and developed structured codebook definitions for each (MacQueen et al. 1998) based on
Bourdieu’s (1986) definitions. To ensure the codes’ validity and reliability, I worked with a second trained coder to iteratively revise the codes until we reached high levels of inter- coder reliability as measured by Cohen’s kappa (i.e. � > .80) (Hruschka et al. 2004). All interview data were then coded, paying close attention to the ways that entrepreneurs understood and navigated barriers and challenges throughout the entrepreneurial process, what factors were most challenging to them, and what factors ultimately led to previous entrepreneurial failure. After all data were coded, I conducted a systematic comparison of
106 coded segments between Khayelitsha-based (Black) entrepreneurs and city bowl-based
(White) entrepreneurs, comparing coded segments both within the same group and across the two groups (Boeije 2002) to understand (a) how each group of entrepreneurs used different forms of capital, and (b) which forms of capital—financial, social, institutional cultural, objectified cultural, or embodied cultural—posed greater challenges to one group over the other.
Findings
To discuss how both Black and White entrepreneurs use financial, social, and cultural capitals, I have organized my findings according to the different stages of entrepreneurship as outlined by Shane and Venkataraman (2000): (i) identifying entrepreneurial opportunities or ideas (ii) evaluating ideas and (iii) executing ideas. I use case-study vignettes that are typical exemplars of each group to demonstrate how both
Black and White entrepreneurs rely on different forms of capital in each of these phases.
To discuss what forms of capital pose the greatest challenge(s) for entrepreneurs, I analyze the ways in which Black and White entrepreneurs acquire the different forms of capital necessary to the entrepreneurial process and how acquiring the necessary forms of capital poses greater challenges to Black entrepreneurs.
(a) How do entrepreneurs use financial, social, and cultural capital in the
entrepreneurial process?
(i) Forms of Capital Used in Identifying Opportunities
107 Fundamentally, entrepreneurship begins with identifying an idea in which a person can exploit a market-based opportunity (Shane and Venkataraman 2000). While people often have many business ideas, entrepreneurs recognize that to successfully launch and maintain a venture (one that earns enough profits to sustain livelihood) one needs deep, intimate knowledge and experience of their community or market environment (i.e. embodied cultural capital) to single out a “good” idea. The stories of
Anathi, a 29-year old Black woman in Khayelitsha and Jack, a 32-year old White man in downtown Cape Town exemplify how entrepreneurs across Cape Town’s racialized socio-economic divides mobilize their embodied forms of cultural capital to come up with business ideas.
Anathi grew up in a rural village in the Northwest Province; her father was a miner and
her mother a domestic worker. Because both of her parents worked away from their
home, Anathi was raised by her older sister, who also took care of her seven other
siblings. As a child, Anathi dreamed of getting a good education that would enable her to
get a good job in the city and lead to a successful middle-class lifestyle. However, her
grades in high school were not high enough to receive financial support for university,
and so upon completing her matric (high school degree) she moved to Khayelitsha and
took various retail and customer service jobs in downtown Cape Town. Six years later,
unhappy working in low-paying retail positions, Anathi decided to go back to school to
earn a teaching certificate and become a primary school teacher in Khayelitsha. After
teaching for two years, Anathi recognized that many Black children in townships and
rural villages—those like where she grew up—had very few opportunities or resources
for extracurricular activities and experiences, opportunities where they could discover
108 and develop their interests and talents outside of school. So Anathi developed a business
for afterschool childcare that exposes children to subjects they do not receive in school
such as art, music, and theatre. While she has one location in Khayelitsha, she is currently
looking to expand her business to other locations, townships, and rural areas in a
franchise type of model.
***
Jack grew up in very different circumstances to Anathi, but his experience in developing
his honey importing business similarly relied upon his own embodied cultural capital to
identify his business idea. Jack was born in South Africa but spent much of his childhood
moving between Cape Town, California, and London with his father who developed a
software business that contracted with companies in the U.S. and the U.K. Watching and
learning from a father who was an entrepreneur, and having extensive international
experience Jack decided that he too wanted to start his own business after he finished
university. He decided, however, to first go to work for major South African export
brands to gain business experience as he looked for the right opportunity to start a
business. After working for several major South African wine exporters and interacting
regularly with business leaders in South Africa’s food and beverage industry, Jack
recognized a gap in the South African market for honey production, especially as
consumer trends were shifting toward “natural” sweeteners. He left his job in the wine
industry and purchased 400 bee hives to establish a business producing, bottling, and
selling honey both in the domestic and international market.
While Anathi and Jack had extremely different circumstances in their backgrounds and experiences prior to becoming entrepreneurs, they demonstrate how all entrepreneurs rely on their own intimate experience and knowledge of their communities 109 and market environments to identify business ideas. Jack relied on his knowledge and experience of South Africa’s national and international markets along with his time working in the food and beverage industry. Anathi’s idea required not only her experience as a student in a rural, under-resourced area—an experience common for millions of children in South Africa—but also her experience as a school teacher in a township. In this way, as also shown by Pret et al (2016) and Jack and Anderson (2002), embodied cultural capital is fundamental when identifying entrepreneurial opportunities.
(ii) Forms of Capital Used in Evaluating an Idea
A good idea for a business, however, is no indication of entrepreneurial success.
Once entrepreneurs identify a business idea, they must evaluate and assess the idea to determine if it has the potential to become profitable. Evaluating an idea requires interrelated forms of embodied cultural capital, social capital, and financial capital. The experiences of Jackie, a 30-year-old White woman in downtown Cape Town and Jason, a
35-year-old Black man in Khayelitsha exemplify how entrepreneurs rely in these interrelated forms of capital to go about evaluating whether or not to move forward with executing their business ideas.
Jackie grew up in a middle-class suburb in Cape Town with her parents (a government
worker and a stay-at-home mother) and attended the University of Cape Town,
eventually earning a post-graduate degree in nutritional therapy. During her time in
university, Jackie began making “functional smoothies” geared toward different
nutritional needs and selling them at local food markets during the summers. After
110 graduation, she decided that she was more interested in developing products and starting a business than working as a therapist. However, she quickly realized that her smoothie business idea was not viable because the smoothies had to be frozen while transported and stored, and she did not have the upfront costs or infrastructure to scale a frozen product. Her fiancé, an American venture capitalist working in Cape Town, encouraged her to start selling her homemade almond milk, noting the increasing demand for non- dairy milks and seeing that South Africa did not have a manufacturer of almond milk.
However, before Jackie moved forward with this idea—acquiring business licenses, health certificates, purchasing equipment, etc.—she had to make sure that an almond milk business would be viable. So, Jackie began visiting Cape Town’s various specialty food shops and supermarkets to see what types of non-dairy forms of milk existed, purchasing and tasting all of them. She went to Cape Town coffee shops and spoke to baristas, managers, and customers, asking about their interest in almond milk. She gave out samples of her almond milk, asking for feedback. She also researched costs for packaging, equipment, transportation, assessing what her startup costs would be and how much she should sell her product for. As her fiancé worked in venture capital and had advised many businesses in start-up processes, he was able to guide Jackie on what costs to look out for, how to anticipate expenses and project profits. He also introduced her to different business people and entrepreneurs in Cape Town to ask for advice on various aspects of the startup process. This phase of research lasted about a year before Jackie formally started selling any products. All the while, her fiancé and her parents supported her, paying for her daily living expenses.
***
Jason was born in Khayelitsha, but grew up living in the servants quarters behind a block of apartments in the Sea Point neighborhood of Cape Town where mother worked as a
111 maid. When he was in middle-school, his mother’s employer sold the apartment building,
leaving Jason’s mother out of work and forcing them to move to an informally built
house in Khayelitsha. When Jason finished high school, he decided to forgo university,
and find a job right away to help support his mother. He began working for a major
airline contractor, however, after eight years, with no college degree, he could not be
promoted any higher within the company. He was also bored at work and had an idea to
start a children’s clothing business in Khayelitsha and other townships, noting the lack of
options for purchasing well-priced clothes for his own kids. Because his wife was
working and could support them in the short term on her wages, he quit his job to register
his business and begin working on his new idea. To start, he spoke with parents in the
community, asking them where they purchased their children’s clothes and if they would
be more willing to purchase clothes from a locally owned shop in the community. While
be received positive feedback, he wanted information on the retail industry in South
Africa, so he reached out to his mother’s new employer—a White man in town who owns
a major import/export business in South Africa—to ask for advice. “He put things into
perspective for me…I was a bit aloof. I thought it would be easy, simple, you
know…But he called people, while I was with him, people that he knew in the
[clothing] industry.” In speaking with industry insiders, Jason realized that clothing
manufacturing and retail in South Africa was not viable at a small scale—he could
not compete with internationally produced/imported goods and did not have the
upfront capital to start a major import business.
Jackie’s and Jason’s experiences in evaluating their entrepreneurial ideas demonstrate that the embodied cultural capital necessary to identify entrepreneurial opportunities (knowledge of one’s community or target market) is not sufficient in 112 subsequent stages of the entrepreneurial process. Entrepreneurs also require knowledge of and experience with running a business. Jackie and Jason both show how entrepreneurs continue to rely on their knowledge of their communities and potential customer base to evaluate their ideas—Jackie knowing the Cape Town grocery stores and coffee shops, Jason knowing parents and their retail options in Khayelitsha—but neither
Jackie nor Jason had the embodied cultural capital that enabled them to evaluate business costs, predict revenues, or assess the feasibility of their business ideas. To acquire this knowledge, they both mobilized social capital to help them evaluate their ideas and give them information about the Cape Town business environment. Jackie’s fiancé not only guided her through the process of evaluating business costs, but also connected her to further social networks to acquire more information; Jason’s mother’s employer similarly connected him with experts in the retail industry. Finally, Jackie and Jason’s stories both illustrate how obtaining the embodied cultural capital necessary to evaluate a business idea relies on financial capital—often obtained by family support—to cover living expenses and the costs of doing research (transportation, communication, equipment, purchasing sample of competitors’ products etc.).
(iii) Forms of Capital Used in Executing an Idea
Research and evaluation of one’s business and the market environment are continual processes, but executing a business idea requires additional forms of cultural capital, continual reliance on social capital, and more financial capital. While specific forms of knowledge differ greatly across industries or types of businesses, the experiences of Celestine, a 30-year-old White entrepreneur in downtown Cape Town, and
113 Mbuelo, a 32-year-old Black entrepreneur in Khayelitsha exemplify how entrepreneurs mobilize these different forms of capital in executing their business ideas.
Celestine is from a rural farming town in the Western Cape. She earned her bachelor’s
degree in South Africa and completed her master’s degree in transportation engineering
in the Netherlands before returning to Cape Town to work for an urban planning firm. In
2013, she and her husband, a software engineer, left their jobs to start a company that
provides a web-based platform for advertising and hiring low-skilled wage workers in
South Africa. Knowing that it would take several years before they started making
revenue, they sold one of their cars, moved in with Celestine’s grandmother-in-law, and
rented out their own home in order to pay for their start-up expenses. After extensive
market research, Celestine’s husband built a prototype of the platform, and Celestine
began recruiting clients and users. They quickly realized, however, that to be compliant
with South African employment regulations they needed a way to verify the tax ID
numbers of their users. She reached out to a business acquaintance who introduced her to
a high-ranking official in the South African Revenue Service, who in turn worked with
her to develop a process for verifying the tax ID numbers. Celestine also used her
networks to approach anyone she knew who hired workers to tell them about their
platform, and she attended conferences and events to advertise their new business to
employers and businesses. However, she also had to recruit job seekers, specifically
people looking for low-skilled work. Relying heavily on the money that she and her
husband earned from renting out their home, they rented space in a converted shipping
container in one of Cape Town’s townships to set up a satellite recruiting center, hiring
three people from the community to work at the location. With no background in
management or human resources, however, running the satellite location was extremely 114 difficult for Celestine and she realized that she was spending too much of her time working at the recruiting center and not enough developing and troubleshooting issues with the platform. She decided the satellite location was not financially viable at that point in their business and made the decision to close it down until she had the time or financial resources to re-open it.
***
Mbuelo lives in Gugulethu, another township in the Cape Town area near Khayelitsha. In
2012, he quit his job working in a furniture warehouse to start an IT consulting business marketed towards the needs of township businesses. He envisioned a broad-based business that would serve township communities around Cape Town and in other South
African cities, but he quickly realized that he had no knowledge or background in registering or running a business. His business lagged as he struggled to gain enough consistent clients to maintain revenue, and he could not afford to purchase equipment or think about expanding his business. “It was a big shock. I worked for years, but I didn't have to do marketing, administration, those kinds of things. Those are the skills that I didn’t have that they didn't teach me at school.” So Mbuelo started looking online at different options to learn the business skills he lacked, finding an entrepreneurship short course at the University of Cape Town’s (UCT) and a scholarship to pay for the course.
Through the program he was not only introduced to basic business skills such as finance and accounting, but he was also paired with a business mentor—a White entrepreneur in downtown Cape Town who had started and sold several businesses throughout his career—whom Mbuelo was able to ask advice on how to register his business, the best way to set up his financial records, and strategies for marketing and business expansion etc. Through his mentor, he learned of different entrepreneurial development funds and competitions where he could pitch his ideas to compete for small amounts of seed
115 funding to grow his business. His mentor also helped him to craft his business pitch and
articulate his ideas for these competitions.
Celestine’s and Mbuelo’s experiences in executing their business ideas exemplify the additional forms of cultural, social, and financial capital that entrepreneurship requires.
As with the evaluation phase, entrepreneurs continue to rely upon embodied forms of knowledge about their community and market environment in order to seek clients and adjust their business accordingly. However, as Celestine and Mbuelo’s experiences show, entrepreneurs also require both embodied knowledge of how to run a business—skills such as bookkeeping, marketing, office management, human resources, etc.—and industry specific insight and deeper strategic knowledge about how to evaluate when/where/how to execute ideas or hold back, such as with Celestine’s experience in opening the satellite office. While entrepreneurs gain much of this embodied cultural capital through trial and error, they also rely on social capital to acquire such knowledge and resources. Celestine used her networks to learn about hiring practices and legal requirements; Mbuelo was able to learn about marketing, finance, and business strategy through his mentor in his entrepreneurship course. Celestine and Mbuelo also both demonstrate how entrepreneurs rely on financial capital, not only for business expenses, but also for their own personal living expenses before their ventures turn a profit.
(b) What forms of capital pose the greatest challenges for entrepreneurs?
The experiences of both White entrepreneurs in downtown Cape Town and Black entrepreneurs in Khayelitsha demonstrate the central role of embodied cultural capital in
116 the entrepreneurial process and how entrepreneurs rely on social capital and financial capital to acquire the embodied cultural capital necessary to successfully execute an entrepreneurial idea. While all entrepreneurs articulated the importance of all forms of capital, both groups of entrepreneurs felt that that their greatest challenges lay in acquiring the knowledge and skills (embodied cultural capital) necessary to run a business—to know where to seek out the resources, networks, and information necessary to register their business, to know how to leverage the correct and most productive connections in their respective industries, how to handle their business based on limited funding, and how to best mobilize their knowledge of their clients and customer base. As
Taryn, a White entrepreneur in the city explained, “Well you know, it’s all about your knowledge—you have to be willing to learn about things that aren’t particularly your forte. I mean, regardless of what your skill is. If your skill is a bricklayer, but now you want to start your own business, well you’re going to have to learn about finances, you’re going to have to learn about marketing, you’re going to have to learn about HR. If you are not willing to you are inevitably going to fail.” Similarly, Thando, a Black entrepreneur in Khayelitsha stated that, “You need experience. With experience, at least it can give you a bit of understanding of what to expect in business and the different skills you need to address all the different aspects of conducting business.” Or, as Jack—the
White entrepreneur who started a honey business—stated, “You need the street smarts that you get through experience that none of my education could have prepared me for. I mean, I am quite well educated—engineering, finance, MBA, post MBA in entrepreneurship and venture capital—and none of that even could have prepared me. All
117 of that is just theoretical and interesting…for what really is required though, it is not enough.”
As the stories of Jack, Jason, and Celestine show, White entrepreneurs mobilize their social networks and financial capital to help them acquire the necessary embodied cultural capital to successfully execute their business ideas. For Black entrepreneurs in
Khayelitsha, however, it is exceptionally difficult to obtain these forms of embodied cultural capital, both through social networks and financial capital. With very few Black
South Africans in the mainstream business networks of South Africa’s economy, very few township residents have social connections to draw upon to build their embodied cultural capital of the Cape Town business environment. “We grew up with a lot of informal businesses,” explained Christine, a Black entrepreneur in Khayelitsha, “you need a mentor to help give you basic knowledge of what it actually entails to set up a formal business.” As Jason’s and Mbuelo’s experiences demonstrate, Black entrepreneurs often reach out to White entrepreneurs in town to gain this knowledge.
Accessing White entrepreneurial networks in town, however, is extremely challenging for Black entrepreneurs from Khayelitsha. First, their geographical location on the outskirts of the city forces them to spend disproportional amounts of money and time to seek out mentorship. Mbuelo, for example, lamented the cost of taxis to commute to his entrepreneurship course at the University of Cape Town and speak with his mentor each week. Themba, another Black entrepreneur explained, “It takes you 2 hours to get to town if it's peak hour, and then you have to travel back too, so like you will take about 2 hours, 3 hours a day to going there and coming back.” However, when Khayelitsha entrepreneurs do go into town to attended networking events, seek out mentorship, or
118 pitch for funding, many realize that they possess the “incorrect” forms of objectified and institutionalized cultural capital, which prevents them from appearing to be “legitimate” entrepreneurs. Thandiwe explained, “We don’t have references or knowledge from our parents unlike certain races whereby they’re just continuing with something that their parents started, you know. So, the worst is expected for us. We are expected to fail basically, you know, because we are seen upon as people who don’t know what they are doing.” Thus, to appear legitimate and knowledgeable about entrepreneurship,
Khayelitsha entrepreneurs go to great lengths to project the “correct” objective and institutional cultural capital to mark themselves as legitimate entrepreneurs. These outward markers that Black entrepreneurs mobilize institutional markers of knowledge and belonging (e.g. affiliations with the business schools or entrepreneurship programs, as Mbuelo demonstrates), as well as styles of dress (e.g. whether to dress up and wear a suit like the (White) finance entrepreneurs, or dress more casually and wear jeans and a hoodie like the (White) tech entrepreneurs); updated websites and email addresses with a unique domain names (e.g. not a Gmail or Hotmail address); and the “proper” area code on their phone number. For example, Jason explained that “it is crucial” to have a landline area code on one’s phone. He pays extra money each month for a specific cell phone service that allows him the Cape Town landline area code on his cell phone (living in informal housing in Khayelitsha means that many entrepreneurs are unable to have landline phones): “Having a cell phone is good but have a landline it means that okay, at least you are credible… And having website, if you can afford to have one, even better.”
While White entrepreneurs in the city bowl undoubtedly also must adhere to cultural norms of dress and the outward professional appearance of their businesses, not a
119 single White entrepreneur in the city stressed the importance of these forms of objectified or institutional cultural capital in entrepreneurship, demonstrating how (White) cultural norms are an unconscious and deeply engrained habitus in the entrepreneurial environment of the city. Double standards for the appearance of legitimacy of White entrepreneurs in the city compared to Black entrepreneurs from Khayelitsha are also common. For example, not a single White entrepreneur in the city felt it was necessary to have a landline area code on their phone number; in fact, almost all White entrepreneurs operated strictly from their cell phones. However, entrepreneurs in Khayelitsha repeatedly stressed the importance of a City of Cape Town landline area code (an 021 number). Thus, a key way for Khayelitsha entrepreneurs to access the social capital necessary to build their embodied cultural capital of Cape Town’s entrepreneurial environment is to strategically use forms of (White-dictated) objectified and institutional cultural capital to, “help you gain that credibility and respect as an entrepreneur.”
Discussion
These results demonstrate the embedded and interdependent nature of financial, social and cultural capital in the entrepreneurial process, as well as the central role of embodied cultural capital. White entrepreneurs in the city describe their greatest challenges as acquiring the embodied cultural capital necessary to successfully launch and maintain a venture—specifically, gaining the breadth of knowledge and skills that are necessary for entrepreneurship. To acquire these necessary forms of embodied cultural capital, White entrepreneurs rely on social networks and draw on financial capital from
120 family, friends, savings, etc. to give them time to acquire these forms of embodied knowledge
Black entrepreneurs in Khayelitsha described using cultural, social, and financial capital in similar ways, and they also expressed that embodied cultural capital poses the most difficulties in launching entrepreneurial ventures. In addition, however, they articulated in great detail the ways that they strategically employ objectified and institutional cultural capital to appear as legitimate entrepreneurs in order gain access to social networks necessary to gain the needed embodied cultural capital. The focus that
Black entrepreneurs in Khayelitsha put on objectified cultural capital, along with the sheer absence of any mention of objectified cultural capital among White entrepreneurs in the city, implicitly demonstrates the very unconscious ways that White entrepreneurs possess the “correct” (more highly valued) cultural capital in the Cape Town entrepreneurial community. For Black entrepreneurs in Khayelitsha, however, employing objectified cultural capital to present (White entrepreneurial) legitimacy is very conscious and deliberate.
The ways in which Cape Town entrepreneurs rely on interrelated forms of capital lends evidence to the growing body of research on embedded approaches to entrepreneurship, demonstrating how entrepreneurs are institutionally embedded within the social structures of society as opposed to being detached actors reacting to objective market mechanisms and forces (Hermann 2010; Jennings et al. 2013; Marques 2017).
While Marques (2017) and other scholars have long acknowledged the essential role that culture plays in enabling entrepreneurs to identify and/or create entrepreneurial opportunities (Arentz et al. 2013; Dimov 2011; Shane and Venkataraman 2000), little
121 empirical work has examined the crucial role that cultural capital continues to play beyond the initial phase of identifying an entrepreneurial opportunity and throughout the entrepreneurial process. By demonstrating the central role of embodied cultural capital in all phases of the entrepreneurial process, and the ways that entrepreneurs rely on both social capital and financial capital to acquire necessary forms of embodied cultural capital, this research explicates how historical structures of racial marginalization
(re)produce entrepreneurial inequality by posing significantly higher barriers for Black entrepreneurs to acquire the necessary cultural capital. While the growing literature on entrepreneurial inequality focuses heavily on unequal access to financial capital (Austin
2016; Darity et al. 2018; Tippet et al. 2014), these findings demonstrate how increased access to finance alone may not be sufficient to assuage entrepreneurial inequality. Of course, these findings do not diminish the evidence that that lack of financial capital and racial wealth gaps severely hinder entrepreneurship among historically marginalized groups (Levine and Rubenstein 2017). However, this research does show the need to further understand how racially based gaps in wealth are (re)produced by unequal valuation of other non-material forms of capital.
These results therefore show the need to pay attention not just to cultural capital in entrepreneurship research, but also to the ways that different forms of cultural capital create different types of barriers for different populations in their entrepreneurial environment. DeClerq and Voronov (2009a, 2009b) argue that gaining legitimacy in the field of entrepreneurship is necessary for all new entrepreneurs. But according to their research, legitimacy “results not from deliberate planning or intentions but rather from the interplay between everyday practices and the social context,” (my emphasis). On the
122 contrary, this research demonstrates that the strategic use of objectified and institutional cultural capital on the part of Khayelitsha entrepreneurs is a very deliberate and intentional process of using (objectified and institutional) cultural capital to gain legitimacy, and this deliberate process presents additional challenges to entrepreneurs from historically marginalized populations trying to break into dominant entrepreneurial networks.
Conclusion
This research demonstrates that the major challenges to entrepreneurship for Cape
Town entrepreneurs are not mere obstacles or opportunity costs that can be easily identified, removed, overcome, or avoided. Rather, the most difficult aspect that all entrepreneurs encounter in launching successful businesses is gaining the necessary embodied cultural capital to make the right judgement calls and strategize the necessary steps to take, both in times of difficulty and in times of growth. While all entrepreneurs highlighted the important role that embodied cultural capital plays throughout the entrepreneurial process, and the ways that they relied on social and financial capital to help gain this embodied knowledge, for Black entrepreneurs in Khayelitsha, the challenges to gaining this embodied cultural capital are particularly difficult due to historic structures of inequality stemming from colonialism and apartheid. In order to overcome some of these social-structural inequalities, Khayelitsha entrepreneurs strategically rely on forms of objectified and institutional cultural capital to appear
“legitimate” and gain access to networks within the (White) mainstream business and
123 entrepreneurial environment that better enable them to gain the embodied cultural capital necessary for them to succeed
In closing, it is worth reflecting on what these finding could mean for practitioners and policy makers seeking ways to spur entrepreneurship, especially in underserved communities. Above all, this research demonstrates that there is no panacea for overcoming entrepreneurial obstacles, spurring entrepreneurial growth, and enabling entrepreneurial success, a lesson that is important for government programs aiming to facilitate entrepreneurship for historically marginalized populations through objective market mechanisms (e.g. South Africa’s Black Economic Empowerment program).
Rather, the challenges faced by all entrepreneurs are challenges that require time and experience to overcome, as well as a recognition that entrenched power dynamics of society are experienced and reproduced within the entrepreneurial process. As this research shows, the challenges and obstacles that entrepreneurs face are not unique to entrepreneurship, but rather are reflected in the power relations of society writ large.
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129 Table 1: Types of Capital Leveraged by Entrepreneurs
Code Definition Exemplars Financial Capital Money, credit, capital, • Cash or credit to investments that are used to purchase equipment and advance business goals supplies • Cash or credit to pay for labor Social Capital Personal connections and • Mentorship and networks of people that can be guidance from industry used to mobilize resources insiders and/or acquire knowledge • Business acquaintances to facilitate meetings and connections with potential funders • Resources mobilized via friends and family Embodied Cultural Capital Internalized and intangible • Knowledge of industry knowledge, dispositions, norms and values preferences, values, and skills, • Experience and gained through time, knowledge of interacting experience, and acculturation with potential funders • Knowledge of managing finances • Knowledge of managing people • Administration skills Objectified Cultural Capital Outward marks or displays of • Ways of dress cultural preferences, knowledge, • Website domains and and social belonging, including designs displays of where someone is • Telephone area codes from, their tastes and • Email domain addresses dispositions, and/or their norms • Business cards and values • Office space and decor Institutional Cultural Capital Officially and institutionally • Certificates and credited markers of knowledge, credentials experience, skills, values, etc. • University or program affiliations • Work experience for publicly recognized brands or companies
130 CHAPTER 5
CONCLUSION: SUMMARY, SYNTHESIS, AND FUTURE DIRECTIONS
The aim of this research was to contribute to anthropological and interdisciplinary understandings of entrepreneurship through an ethnographic study of entrepreneurs in post-apartheid South Africa. The specific research objectives were:
1. To analyze the motivations of Black entrepreneurs to pursue entrepreneurship in
the Khayelitsha township of Cape Town. The purpose of this analysis was to gain
insight into expressed cultural values of entrepreneurship outside of an a priori
neoliberal analytical framework.
2. To compare the material resources that Black entrepreneurs in Khayelitsha and
White entrepreneurs in downtown Cape Town require to launch and maintain
their businesses, and the mechanisms through which they secure these resources.
The purpose of this analysis was to understand how historical structures of
economic inequality may affect entrepreneurial strategies.
3. To assess the social and cultural obstacles and challenges that both Black
entrepreneurs in Khayelitsha and White entrepreneurs in wealthy areas of
downtown Cape Town face in initiating their business ventures. The purpose of
this analysis was to understand how entrepreneurial obstacles may differ for
populations in different positions of societal power.
The main chapters in this dissertation (Chapters 2, 3 and 4) were each designed to address these objectives. A summary of the findings of each chapter is provided below.
131 Summary of Findings
Chapter 2: Entrepreneurship as Legacy Building: Re-imagining Capitalism in Post- Apartheid South Africa. Invited to revise and resubmit, and currently under the second round of review in the peer-reviewed journal, the American Anthropologist.
Chapter 2 addresses my first research objective. In this chapter, I demonstrate that while current anthropological scholarship on entrepreneurship understands entrepreneurial action to be motivated by Western neoliberal ideology (e.g. individualism and autonomy), Black South African entrepreneurs in Khayelitsha understand entrepreneurship in more altruistic ways – as a form of “legacy building.” This cultural construct of legacy building encapsulates three broad themes of entrepreneurial motivation expressed by Khayelitsha entrepreneurs: (1) the desire to build wealth and financial support for future generations of Black South Africans; (2) the desire to leave a transformed and improved community for future generations of Black South Africans; and (3) the desire to establish Black presence in South Africa’s mainstream business sector. I argue that by envisioning entrepreneurship as legacy building, Khayelitsha entrepreneurs view their businesses—and by extension the capitalist market in which they operate—as vehicles for social change and economic transformation. These understandings of entrepreneurship—which are rooted in notions of personhood and belonging among Nguni-speaking Southern African populations—demonstrate alternative ideas of capitalism that have the potential to dislodge dominant neoliberal ideologies.
132 Chapter 3: Re-thinking Entrepreneurship Through Distribution: Non-Market Relations and Inequality Among South African Entrepreneurs. Prepared for submission to the peer- reviewed journal, the Journal of the Royal Anthropological Institute.
Chapter 3 addresses my second research objective. In this chapter, I argue that while anthropologists recognize the importance of non-market distributive resources and strategies (e.g. gifts, reciprocity, trade, barter, etc.) that facilitate entrepreneurial practice, research has not examined how these non-market distributive mechanisms operate across socio-economic resource environments, and what these differences might mean for understandings of entrepreneurship. By examining the non-market economic strategies of both Black entrepreneurs in Khayelitsha and White entrepreneurs in downtown Cape
Town, I show that both groups fundamentally rely upon non-market distributive resources to launch and maintain their businesses. White entrepreneurs largely rely on vertical structures of inter-generational wealth to acquire the material resources they need for their businesses, while Black entrepreneurs in Khayelitsha do not have adequate intergenerational resources to draw upon. Therefore, Black entrepreneurs in Khayelitsha rely on lateral modes of support to acquire the material resources they need to bolster their business ventures. These findings lend further evidence towards demonstrating that
(a) entrepreneurship is not simply the act of executing market-based opportunities, but rather must be seen as mobilizing distributive resources and labor to leverage the market to one’s advantage, and that (b) historical structures of economic inequality impact not only how distributive mechanisms function, but also how these distributive mechanisms facilitate productive entrepreneurial capacity.
133 Chapter 4: Cultural Capital and the Reproduction of Entrepreneurial Inequality: Comparative Ethnographic Evidence from Cape Town, South Africa. Under review in the peer-reviewed journal, Socio-Economic Review.
Chapter 4 addresses my third research objective. In this chapter, I show that while the interdisciplinary scholarship on entrepreneurship has begun to recognize the non- material forms of capital that are required for entrepreneurial success, few scholars have analyzed the role of cultural capital in the entrepreneurial process. Thus, I analyze how both groups of entrepreneurs use financial, social, and cultural capital, and I assess which form(s) of capital pose the greatest barriers to entrepreneurs. My findings show that
White entrepreneurs in the city view their greatest challenge to be acquiring the embodied cultural capital necessary to successfully launch and maintain a venture— specifically, gaining the breadth of knowledge and skills that are necessary for entrepreneurship. To acquire these necessary forms of embodied cultural capital, White entrepreneurs rely on social networks and draw on financial capital from family, friends, savings, etc. to give them time to acquire these forms of embodied knowledge. Black entrepreneurs in Khayelitsha also stated that embodied cultural capital poses the most difficulties in launching their entrepreneurial ventures. However, to gain the necessary embodied cultural capital, Black entrepreneurs in Khayelitsha consciously and strategically employ objectified and institutional cultural capital to appear as legitimate entrepreneurs. This appearance of legitimacy was necessary for Black entrepreneurs to gain access to predominantly White entrepreneurial social networks necessary that were necessary to gain the needed embodied cultural capital. White entrepreneurs, however, did not mention the importance of appearing “legitimate” via forms of objective and institutional capital as the mobilization of objectified and institutional cultural capital in
134 White entrepreneurial networks appears to be largely unconscious. These findings highlight (a) the central role that cultural capital plays in entrepreneurship; (b) how entrepreneurs mobilize social and financial capital to acquire cultural capital; and (c) how cultural capital presents significantly higher barriers to entrepreneurs from populations who are historically marginalized from dominant entrepreneurial environments and social networks.
Synthesis of Theoretical Contributions
In Chapter 2, I examined the entrepreneurial motivations of Black entrepreneurs in the Khayelitsha township of Cape Town. While current anthropological research on entrepreneurship frequently mobilizes analytical frameworks developed by Bourdieu
(1998), Foucault (2008), and Harvey (2005) to posit that entrepreneurial action is rooted in neoliberal capitalist ideology (e.g. Faas 2018; Freeman 2015; Gershon 2011; Huang
2017; Isik 2010), I found that Khayelitsha entrepreneurs understand entrepreneurship in more altruistic ways. For them, entrepreneurship is a form of “legacy building,” which they view as a path to establish and leave behind greater wealth and more robust opportunities for future generations of Black South Africans. This finding contributes to the line of anthropological research initiated by Hart (1975), that investigates the moral values surrounding entrepreneurial activity. By analyzing the expressed cultural understandings of entrepreneurship outside of a priori Western neoliberal frameworks, I demonstrate the need for anthropologists to better theorize diverse and local interpretations of entrepreneurship, especially as such understandings will give more
135 insights into localized and diverse understandings of capitalism (cf. Browne 2009;
Gibson-Grahame 2008; Ferguson 2010).
Yet, as recent research in Latin American shows, merely understanding the existence of diverse moral values surrounding economic action is not sufficient.
Scholarship on non-capitalist indigenous economic movements in the Andes, for example, demonstrates that alternative and diverse economic ideologies rarely scale beyond the community level to enact broad-scale socio-economic change in the face of dominant Western economic policy initiatives (Fabricant 2010; Postero 2010;
Weismantle 2006: Wutich and Beresford 2015; Wutich et al. 2017). Therefore, research is also needed to understand whether or not people who hold diverse views and understandings of entrepreneurship are able to enact these views in the context of historical power structures and dominant Western capitalist ideologies and practices.
In recognizing the diverse understandings of entrepreneurship held by Black
South Africans in Khayelitsha, the two subsequent analyses in this dissertation seek to understand how more than a century of colonial and apartheid rule have impacted Black
South Africans’ ability to enact their visions of entrepreneurship and become successful entrepreneurs. Following Barth’s (1967) emphasis on entrepreneurial practice, I do this by comparing the entrepreneurial practices and strategies of Black entrepreneurs in
Khayelitsha to White entrepreneurs in downtown Cape Town.
In Chapter 3, I examine the non-market distributive resources and strategies (e.g. gifts, reciprocity, trade, barter, etc.) that facilitate entrepreneurial practice across both populations of entrepreneurs. While anthropological work on small-scale and informal entrepreneurs in marginalized populations has demonstrated the importance of non-
136 market resources (e.g. gifts, inheritance, reciprocal exchanges, etc.) for initiating and sustaining entrepreneurial activity (Antrosio and Colloredo-Mansfeld 2015; Chibnik
2010; Clark 1989, 1994; Little 2002; Lundy et al. 2017; Milgram 2013), this line of work has not examined the resource strategies of entrepreneurs across social classes. By comparing these resources strategies across the socio-economic divides of Cape Town’s entrepreneurial environment, I show that productive capacity among both sets of entrepreneurs relies upon the resources directly given or traded for among kin and social networks. Given the unequal structures of resource distribution among Black and White
South Africans that are rooted in the nation’s colonial and apartheid history, entrepreneurship rarely enables people to overcome economic inequality. Rather, entrepreneurial inequality is reproduced through these unequal structures of distributive resources. As such, I argue that anthropologists should take caution when arguing that non-market distributive resource strategies among the poor are emancipatory because such arguments are frequently used by development official to curtail systems of social support for the poor (cf. Browne 2004; Elyachar 2005; Ferguson 2015). On the contrary, poor populations will only be able to overcome entrepreneurial inequality with more robust systems of wealth and material support.
While understanding the material relations and strategies necessary for entrepreneurial success is crucial for understanding entrepreneurial inequality (Austin
2016; Darity et al. 2018; Olawale and Garwe 2010; Ramukumba 2014; Tippet et al.
2014), interdisciplinary and sociological scholarship on entrepreneurship recognizes the importance of other non-material forms of capital to entrepreneurial practice (DeClercq and Voronov 2009a, 2009b; Kim et al. 2006; Light and Dana 2013; Pret et al. 2016;
137 Valdez 2011). Therefore, in Chapter 4, I examine how both Black entrepreneurs in
Khayelitsha and White entrepreneurs in downtown Cape Town use financial, social, and cultural capital, and I assess what form(s) of capital poses the greatest obstacle for entrepreneurs. I show that both groups of entrepreneurs view cultural capital as their greatest challenge to entrepreneurship. In doing so, I highlight the central role that cultural capital plays in the entrepreneurial process; I show how entrepreneurs mobilize social and financial capital to acquire cultural capital; and I argue that, through this process, it is significantly harder for populations that are marginalized from dominant entrepreneurial environments and networks to acquire cultural capital. These findings demonstrate how increased access to material resources alone may not be sufficient to assuage entrepreneurial inequality.
Taken together, my findings from all three analyses contribute to both lines of anthropological research on entrepreneurship stemming from Belshaw’s (1955) work: (1) the moral values and understandings of entrepreneurship, and (2) the strategies and practices of entrepreneurship. I demonstrate that scholarly understandings of entrepreneurship can be expanded to better theorize diverse economies, localized understandings and values of entrepreneurship, and the relationship of entrepreneurship to notions of economic justice (Chapter 2). Yet, through comparative analysis with entrepreneurs from dominant social positions (Chapters 3 and 4), I also demonstrate that diverse and localized values of entrepreneurship must be considered within the context of historically embedded power structures. Such context is needed to understand the extent to which diverse entrepreneurial values have the potential to make broad-scale social and/or cultural change. As such, this dissertation demonstrates the importance of putting
138 these two streams of anthropological research into conversation with one another in order to gain a more holistic understanding of the relationship between the cultural meanings and the practices of entrepreneurship.
Broader Impacts
While this research is an ethnographic study based on a non-representative sample, my findings indicate important applied lessons for policy makers and development officials in South Africa and beyond. Of course, South Africa’s history and socio-cultural makeup are unique, but the nation’s extreme economic inequality, rooted in racial oppression, is a pressing problem that other post-colonial and post-slavery nations face. For example, the South African government’s campaign to promote entrepreneurship as the solution to unemployment, poverty, and socio-economic inequality mirrors similar strategies used by governments of other nations, including the
United States (Baradaran 2017), Brazil (Osborn and Reeves 2018), Egypt (Elyachar
2012), and China (Lengen 2017). The rhetoric of entrepreneurial policies across these contexts often positions the poor as the solution to their own poverty – arguing that by simply encouraging and providing pathways for people to become entrepreneurs, the poor will be able to build their own wealth and catalyze their own socio-economic mobility
(Browne 2004; Elyachar 2005; Ferguson 2015). Yet, by analyzing entrepreneurial strategies and practices in comparative context across socio-economic resource environments, my research demonstrates that entrepreneurship must be recognized as an economic activity that benefits from and relies upon greater wealth, more robust systems of social support, and greater valuation of non-White and/or non-Western cultural
139 practices. There must be a recognition that entrenched societal power dynamics are experienced and reproduced within entrepreneurial practices. As such, more robust entrepreneurial activity will likely result from addressing disparities in wealth and power, rather than serving as an avenue to achieve these goals.
Limitations and Future Research Directions
There are several limitations to this research worth noting, and as such, these limitations provide important directions for future research on entrepreneurship in South
Africa and beyond. First, as a largely inductive ethnographic study, my research employed a non-probabilistic sample of entrepreneurs. Therefore, my results cannot be extrapolated beyond my research population. However, in Chapter 2, I provide the basis for a cultural model of “entrepreneurship as legacy building.” Future research should aim to test this model with cognitive anthropological methods, including cultural consensus analysis (Romney et al. 1986; Weller 2007), to see if this cultural understanding of entrepreneurship is held by a broader population of Black entrepreneurs both within
Khayelitsha and in other South African township communities. By building and testing models of cultural/moral values of entrepreneurship, anthropologists have the opportunity to make unique and important contributions to the growing interdisciplinary literature on social entrepreneurship and other work on entrepreneurship and altruism (cf. Austin et al.
2012; Dacin et al. 2011; Hunter et al. 2007; Peredro and Chrisman 2006; Tan et al. 2005).
Second, while my research incorporated the perspectives of both male and female entrepreneurs (among both Black entrepreneurs in Khayelitsha and White entrepreneurs in downtown Cape Town), this study did not analyze differences by gender in the either
140 moral values or the strategies and practices of entrepreneurship. However, important interdisciplinary work on entrepreneurship indicates that there are significant differences in the experiences of entrepreneurs based on gender (Bruni and Poggio 2004; Kirkwood and Campbell-Hunt 2007; Ozkazanc-Pan and Muntean 2018). While this work has primarily examined gender differences in entrepreneurial experience and practice, future research should examine gender differences in both entrepreneurial practices and moral values and understandings of entrepreneurship in South Africa and beyond.
Additionally, it is important to note that South Africa is an extremely ethnically diverse nation, and racial and ethnic divisions should not be overly simplified as “Black vs. White” (Boswell 2015; Spiegel and Becker 2015). Thus, future research should expand the analyses I have presented in this dissertation to better understand differences among South Africa’s diverse racial/ethnic groups, including Coloured South Africans,
South Africans of Indian and Chinese descent, as well as Afrikaners and South Africans of British descent, etc. For example, work by Valdez (2011) demonstrates the importance of analyzing entrepreneurial practice at the intersections of class, gender, and ethnicity among immigrant Latino entrepreneurs in the United States. Such an intersectional approach within South Africa, would greatly add to both local understandings and broader theoretical conversations on entrepreneurship.
Conclusion
Above all, this dissertation demonstrates that further anthropological study of entrepreneurship must put scholarship on moral values of entrepreneurship into conversation with research on strategies and practices of entrepreneurship. Some scholars
141 argue that anthropological research on entrepreneurship has yet to develop into a cohesive body of work that posits an overarching theory of entrepreneurship (Lundy et al.
2017; Reichman 2013; Stewart 1992). Yet, by building on two different and independent streams of research on entrepreneurship—represented by the works of Hart (1975) and
Barth (1967)—I demonstrate that positing a nomothetic theory of entrepreneurship would likely overlook the diverse, localized understandings and “uses of” (Ferguson 2010) entrepreneurial practice in different cultural contexts. Marx (1967) argued that a society’s cultural values are reflected in its prevailing economic order. By examining both the moral underpinnings and the practices of entrepreneurship, we can begin to better understand the potential (or lack thereof) for entrepreneurial practice to affect socio- economic change.
142
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162 BIOGRAPHICAL SKETCH
Melissa Beresford was born in San Luis Obispo, California. She earned her bachelor’s degree in Urban Studies and Planning at the University of California, San Diego in 2005 with minors in History and Environmental Studies. She earned her master’s degree in
Social Science at the University of Chicago in 2008. Melissa’s research investigates issues of resource inequality and social transformation within the contexts of capitalism.
Between 2011 and 2013, she conducted and published research that focused on indigenous efforts to reconceptualize economic development practices in Bolivia.
Between 2013 and 2016, she returned to South Africa, where she is a dual citizen, to embark upon extended ethnographic fieldwork that examines the efforts of entrepreneurs who are seeking to transform the nation’s post-apartheid economy. That research forms the basis for this dissertation.
163 i Cecil Rhodes was a 19th century British businessman and mining magnate in South Africa who advocated settler colonialism and White supremacy. The prestigious Rhodes Scholarship is funded by his estate. ii See Makhulu (2015) for an ethnographic account of informal housing in Cape Town. iii South Africa has eleven official national languages. English is the primary language spoken in business and commerce and is the primary common language of the country. All entrepreneurs at the Khayelitsha hub are bi-lingual English speakers and they use English on a daily basis for their businesses, especially when pitching ideas, applying for financing, vying for contracts, etc. I asked each of my interviewees about their native language, and seven of the eleven official language of South Africa are represented in my sample. iv A common refrain among entrepreneurs is, “time is money.” In this regard, I chose to offer a small payment to all of my interviewees (at the time of my interviews, R200 was approximately $15 USD) as a token acknowledgement that I valued the time they took to sit for a formal interview. v As part of Black Economic Empowerment (BEE), South Africa has put in place an incentive structure for corporations to contract and do business with Black owned companies. For further discussion on BEE laws, see Iheduru (2004). vi Themba’s use of the word “pimp” here is urban slang, meaning ‘to fix up’ or ‘to make better,’ as in, “pimp my ride” in talking about fixing up a car. vii A key area of anthropological research on entrepreneurial development initiatives has been the extent to which such programs cultivate Western, market-centered notions of personhood, and how such notions of personhood are reshaped by local (non-Western) systems of value. See, for example, Freeman (2014) in the Belize and Marshall (2018) in Northern Uganda. While these examinations of the impact of entrepreneurship on notions of personhood are important, I leave those conversations aside in this article to focus on material aspects of entrepreneurial practice. viii It should be noted that in many South Africa townships there are notable class differences among the resident population. While the majority of residents in townships are poor and in informal housing, formalized areas of some townships consist of modest to elaborate housing with some wealthy residents who choose to continue to reside in township communities. For a detailed account of Cape Town’s township communities, see Makhulu (2015). ix Black Economic Empowerment policies were first implemented in 2003. In 2007, the program was overhauled and re-named, Broad-Based Black Economic Empowerment (B-
164
BBEE). However, in everyday parlance, people commonly still refer to these policies as simply, “BEE.” For more information on BEE policies and their effects see Iheduru (2004, 2008). x The names of all three entrepreneurial hubs are pseudonyms to protect identity. At the time of my research, The Station was the only entrepreneurial hub located in Khayelitsha. Two other entrepreneurial hubs were in the process of being built in the townships of Philippi and Gugulethu, but they had not yet opened at the time of my fieldwork. xi Other entrepreneurial hubs in Khayelitsha did formerly charge members, but closed down prior to this research because community members largely could not afford the fees. xii South Africa has eleven official national languages. English is the primary language spoken in business and commerce and is the primary common language of the country. All entrepreneurs at the Khayelitsha hub are bi-lingual English speakers and they use English on a daily basis for their businesses, especially when pitching ideas, applying for financing, vying for contracts, etc. I asked each of my interviewees about their native language, and seven of the eleven official language of South Africa are represented in my sample. xiii Among the entrepreneurs that I worked with, a common refrain was “time is money.” In this regard, I gave a small payment to all of my interviewees (at the time of my interviews, R200 was approximately $15 USD) as a token acknowledgement that I valued the time they took to sit for a formal interview. xiv At the time of my research, the exchange rate was, on average, 1 USD to 13 ZAR.
165