Entrepreneurial Ecosystem: Challenges and Solutions for South Africa

This report provides an analysis of the entrepreneurial ecosystem in South Africa, addressing its definition, key components, and models. It reviews literature on entrepreneurial ecosystems, highlighting various pillars and models proposed by Feld, Isenberg, and the World Economic Forum (WEF). The report identifies challenges within the South African context, particularly the need to strengthen productive entrepreneurship beyond just new company formation and self-employment rates. It proposes solutions focused on government's role in establishing supportive national framework conditions, emphasizing education, research, taxation, and business protection legislation. The report suggests that government should identify and include key stakeholders, participate in ecosystem discourse, and enable entrepreneurial activity through appropriate policies and support mechanisms at both local and sectoral levels.

ENTREPRENEURIAL ECO-SYSTEM
IN
SOUTH AFRICA

ENTREPRENEURIAL ECOSYSTEM 2
Table of Contents
1.0 Introduction....................................................................................................................................3
2.0 LITERATURE REVIEW.......................................................................................................................3
2.1 Entrepreneurial Ecosystems: Definitions and Related Concepts...............................................3
2.2 Entrepreneurship Ecosystem Pillars and Models.......................................................................5
2.2.1 Model by Feld......................................................................................................................7
2.2.2 Model by Isenberg..............................................................................................................7
2.2.3 Model by World Economic Forum (WEF)............................................................................7
2.3 Proposal for Entrepreneurial Activity in South Africa................................................................7
2.4 Solution for the South African Entrepreneurial Ecosystem........................................................8
4.0 Concluding Remarks......................................................................................................................10
References............................................................................................................................................11

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1.0 Introduction
The number of new firms and independently employed people has expanded significantly
increased in the most recent years. The rate of entrepreneurship has dramatically increased
within 10 years achieving the 10% level in 2012. This can be known as the Entrepreneurship
Miracle. There is no other advancement driven economy that has seen its entrepreneurship
rate developing to this degree over 10 years. This Entrepreneurship Miracle has halfway been
caused by open arrangements, planned and unintended. Entrepreneurship can be seen and
estimated from various perspectives and can have different outcomes. The ascent of
entrepreneurship did not run as an inseparable unit with an expanding ingenuity of the
economy. The rate of (youthful) high-development firms is still rather fair, despite the fact that
this rate has expanded to some degree throughout the most recent years. The goal of this
report is to examine the entrepreneurial ecosystem with a specific end goal to give bits of
knowledge to new approach headings (Dhesi, 2010).
In what manner can the entrepreneurial ecosystem be adjusted to fortify beneficial
entrepreneurship rather than general rates of new companies and independent work? On the
off chance that the development in the number of new companies and independently
employed has not prompted an expansion in advancement, what should be done to accomplish
this? The general message is that development by entrepreneurs requires underway,
dispersion, and utilization. For this, researchers such as Watkins, Meisers, and Visser (2012)
require profound skill and the associations between sets of mastery at an ideal subjective
separation.
This paper will center around the area where government's part is almost overwhelming, in
particular, the national structure conditions. In the event that these national system conditions
are not empowering activities at the neighborhood level, the impacts of nearby activities are
probably going to remain problematic.

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2.0 LITERATURE REVIEW
2.1 Entrepreneurial Ecosystems: Definitions and Related Concepts
The entrepreneurial ecosystem is a somewhat late idea, with no mutual definition yet. It
comprises of the segments entrepreneurial and ecosystem (Fillis, 2010). Entrepreneurial alludes
to entrepreneurship. Entrepreneurship is a procedure by which chances to make novel
merchandise and enterprises are found, assessed, and abused. All the more comprehensively
characterized, it is the procedure by which people seek after open doors for development.
Development includes making new an incentive in the public eye. This development can be
arranged towards investigation, i.e. seeking after circumstances that are drastically new, or
towards abuse, refining existing openings. The entrepreneurial ecosystem writing every now
and again limits entrepreneurial firms to high-development entrepreneurial firms, with the
claim that this kind of entrepreneurship is a vital wellspring of advancement, efficiency
development, and work, or to technology-based new businesses. What is clear, in any case, is
that the researcher ought not to stir up factual pointers of entrepreneurship like independent
work (self-employment) and private ventures (small businesses) with the procedure of
entrepreneurship (Satish and Rajesh, 2014).
The second segment is 'ecosystem'. As per Alexandre and Nicolás (2016), an 'ecosystem' is a
natural group of associating life forms and their physical condition. This ought not to be taken
excessively strict with regards to entrepreneurial ecosystems. The entrepreneurial ecosystem
idea underlines that entrepreneurship happens in a group of related on-screen characters.
More, specifically, the entrepreneurial ecosystem writing centers around the part of the (social)
setting in empowering or compelling entrepreneurship, the interdependencies between
performing artists inside the framework. The entrepreneurial ecosystem approach imparts to
more settled ideas like bunches, mechanical areas, advancement frameworks and learning
districts the emphasis on the association's outer conditions for development and business
execution. Be that as it may, it doesn't do as such from the beginning stage of the firm yet puts
the entrepreneur on the inside (Evans, 2011).
According to Robert, Albert, and Ernest (2017), the entrepreneurial ecosystem idea focuses on
how entrepreneurship is empowered by an extensive arrangement of assets and on-screen

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characters, which have a vital part to play in empowering entrepreneurial activity. The vast
majority of these give off an impression of being available locally, frequently expecting eye to
eye contacts or neighborhood portability. A basic part of the working of these ecosystems
seems to comprise of types of administration that empower associations that are adequately
steady to empower ventures yet adequately adaptable to permit development to happen.
Also, specific formal and casual organizations empower these types of administration and
eventually beneficial entrepreneurial activity. The researcher has characterized an
entrepreneurial ecosystem as a reliant arrangement of performing artists that is administered
such that it empowers entrepreneurial activity.
Table 1: Nine qualities of a fruitful entrepreneurial society (Nwankwo, 2013)
Quality Explanation
Leadership A solid gathering of entrepreneurs who are obvious, available and focused on
the district being an awesome place to begin and grow an organization
Mediators Some very much regarded coaches and guides giving back over all stages,
segments, socioeconomics, and topographies and additionally a strong
nearness of compelling, noticeable, all around incorporated quickening
agents and hatcheries
Network
Density
Profound, the very much associated group of new companies and
entrepreneurs alongside drew in and obvious financial specialists,
consultants, coaches, and supporters. Ideally, these individuals and
associations cut crosswise over segments, socioeconomics, and social
engagement. Everybody must offer back to his group
The
government
Solid governmental backing for and comprehension of new businesses to
financial development. Moreover, steady strategies ought to be set up
covering financial improvement, duty, and venture vehicles.
Talent Wide, profound ability pool for all level of workers in all segments and
subject matters. Colleges are a magnificent asset for start-up ability and
ought to be very much associated with the group
Support
Services
Proficient services (bookkeeping, legal, insurance, real estate, counseling) are
coordinated, available, viable, and fittingly estimated
Engagement Countless for entrepreneurs and group to associate, with exceedingly
obvious and credible members (e.g. pitch days, meet-ups, startup ends of the
week, training camps, rivalries, and hackathons)
Corporations Huge organizations that are the grapple of a town ought to make particular
divisions and projects to support collaboration with high-development new
companies
Capital A strong and steady group of VCs, business angels, seed speculators, and

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different types of financing ought to be accessible, unmistakable, and open
crosswise over parts, socioeconomics, and topography.
2.2 Entrepreneurship Ecosystem Pillars and Models
Jay, Abubakar, and Sagagi (2011) argue that the ideas of entrepreneurial ecosystems have
received increased consideration from policymakers. Nonetheless, it experiences a few
weaknesses: it is repetitious - entrepreneurial ecosystems are perceived and adulated where
large amounts of (some type of) entrepreneurship are seen to be available. It just gives
arrangements of applicable elements, without a reasonable investigation of how these are
associated in space and after some time, and key components. Moreover, it doesn't give an
unmistakable 'ward' variable on what is an effective entrepreneurial ecosystem (either in
entrepreneurial terms or in more extensive welfare objectives). What's more, it isn't clear what
the sufficient unit of investigation is: the national economy, the local economy, a division, or a
corporate framework.
Table 2: South African Entrepreneurial Ecosystem (Johan and Alistair, 2017)
Pillars Components
Marketplaces Domestic marketplaces: Large/medium/small organizations as clients,
governments as client
Foreign marketplaces: Large/medium/small organizations as clients,
governments as client
Work-force
(human capital)
Administration ability, specialized ability, entrepreneurial organization
encounter, outsourcing accessibility, access to foreigner workforce
Finance & Funding Loved ones, business angles, financial specialists, private value, funding,
access to the obligation
Mentors or
Support systems
Coaches/counsels, proficient services, hatcheries/quickening agents,
systems of entrepreneurial companions
Government &
Regulatory
framework
The simplicity of beginning a business, assess impetuses, business-
accommodating enactment/strategies, access to an essential
framework, access to media communications/broadband, access to
transport
Instruction
(training)
An accessible labor force with pre-college instruction, an accessible
workforce with a college instruction, entrepreneur-particular
preparation
Major universities
as catalysts
Advancing values of regard for entrepreneurship, assuming a main part
in thought arrangement for new organizations, assuming a crucial part
in giving graduates to new organizations
Ethnic support Resilience for risk and disappointment, inclination for independent

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work, examples of overcoming adversity/good examples, inquire about
culture, positive picture of entrepreneurship, the festival of
advancement
2.2.1 Model by Feld
The way to deal with supporting entrepreneurs all around changed the minute Brad Feld
distributed Startup Communities in 2012. He states that entrepreneurs must lead the startup
group and leaders or pioneers must have a long-haul responsibility. Moreover, the startup
group must be comprehensive of any individual who needs to take part in it in addition to being
proceeded with exercises that draw in the whole entrepreneurial stack.
2.2.2 Model by Isenberg
Since 2010, the expression entrepreneurship eco-system has quickly turned into a vital piece of
the entrepreneurship and monetary improvement discussion. The mainstream utilization of the
environment representation ordinarily alludes to formal foundations whose pioneers,
individuals, or sanctions unequivocally expect to encourage entrepreneurship. The suspicion
fundamental projects are that neither goal nor convention is basic for environment
components, and in this manner, the use nearly parallels the organic utilization of the term in
that the nearness of basic components (e.g., social standards that value riches creation and
business achievement) require not be purposeful or formal.
2.2.3 Model by World Economic Forum (WEF)
An entrepreneurship wave is clearing the world. At the as of late finished up WEF on Africa, this
was cited as one of the key patterns in Africa. Entrepreneurship isn't limited just to
organizations. An individual or a gathering of youthful people now trust that they can tackle
complex issues without anyone else. With expanded access to capital, low boundaries to
passage and diminished hazard similarly as landing once again into position tracks are
concerned; this expanding enthusiasm for entrepreneurship, particularly among the more
youthful age, has three noteworthy ramifications for extensive organizations: plans of action

ENTREPRENEURIAL ECOSYSTEM 8
should be more open, HRM needs to think about the extent of work, and the changing extent of
marketing.
2.3 Proposal for Entrepreneurial Activity in South Africa
Development by free entrepreneurs is most emphatically influenced by group entrepreneurial
ecosystems, while entrepreneurial activity by workers is unequivocally molded by corporate
entrepreneurial ecosystems. Be that as it may, entrepreneurial representatives can likewise
empower the development of free new businesses and they may proceed with their profession
as independently employed and produce new an incentive in coalitions with other
independently employed (Ven and Tigineh, 2010).
An entrepreneurial ecosystem is a reliant arrangement of performing artists that are
represented such that it empowers entrepreneurial activity in South Africa (Svensson, 2013). It
puts entrepreneurs middle of everyone's attention, except stresses the setting by which
entrepreneurship is empowered or obliged. Entrepreneurs are not just key objects of study,
they are additionally observed as the pioneers of the entrepreneurial ecosystem, while others,
similar to governments and service suppliers are viewed as feeders of the entrepreneurial
ecosystems. The essential obligation of the legislature is to get the structure conditions right
(e.g. instruction, investigate, tax collection, business assurance enactment, item advertise
controls). There is no other performing artist that will lead the pack here. This is diverse at the
nearby level: here entrepreneurs and other entrepreneurial performers are driving, and the
administration (neighborhood or national) may encourage them. According to Eden (2013), at
the neighborhood/sectoral level, the open approach may improve the ecosystem in two ways:
a) Distinguish and include the key performing artists inside each extraordinary gathering of
partner (e.g. serial entrepreneurs and built up firms)
b) Participate in an entrepreneurship ecosystem discourse together with the other
pertinent partners.
2.4 Solution for the South African Entrepreneurial Ecosystem
In the past segment, the researcher has demonstrated that there has been a tremendous
ascent of independent work and new firm arrangement in South Africa. In any case, this was
not joined by an ascent in development in South Africa. The expected connection amongst

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entrepreneurship and development does not appear to hold in South Africa, particularly
because of the extensive offer of (non-imaginative and non-development arranged) solo
independently employed. Solo independently employed appear to be in charge of flexibility (an
adaptable belt in the work advertise), yet not for advancement. The ascent of independent
work and new firm development has influenced the work to advertise more adaptable
(enhanced static effectiveness) yet without an expansion in advancement (enhanced dynamic
proficiency). From a less hopeful point of view, one can contend that the ascent of solo
independent work has made another class of (freely) working poor. Regardless, there is a
noteworthy arrangement undertaking not to give entrepreneurship a chance to be a driver of
efficiency decrease (or, best case scenario an adaptable belt in the work advertise), however, to
animate gainful entrepreneurship (Kim, Sherrena, and Helen, 2013).
In the event that the development of autonomous entrepreneurship has not prompted an
expansion in advancement, what should be done to accomplish this? The general message is
that development requires tests by individuals interfacing underway, conveyance, and
utilization. For this, entrepreneurs require profound skill and communications between sets of
mastery at an ideal psychological separation. Three territories of entrepreneurial yields in the
setting are stressed. To begin with, empower development by autonomous entrepreneurs in
high-development new businesses. Second, animate advancement by autonomous experts in
groups of independently employed. Third, empower and invigorate entrepreneurial activity for
noteworthy value creation by workers. Advancement by autonomous entrepreneurs is most
emphatically influenced by group entrepreneurial ecosystems, while entrepreneurial activity by
representatives is firmly adapted by corporate entrepreneurial ecosystems. The researcher
along these lines require a move far from factual or lawful substances like independently
employed and SMEs towards individuals collaborating to make new value, in any case,
represented (Maizatulakma, Zaleha, Zakiah, and Azlina, 2015).
Thus, non-contend agreements compel the versatility of abilities to seek after entrepreneurial
open doors outside the fringes of their manager's association. Along these lines, it may oblige
the recombination of learning with on-screen characters outside the underlying business'
association, and the speculation and response of information in novel settings (Richard and Erik,

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2016). With a specific end goal to animate interest for entrepreneurial openings and to back the
improvement of these open doors by (gatherings of) entrepreneurs (and consequent
advancement of new learning), the SA government, at both the national and neighborhood
(local) level can open up open acquisition to (cooperatives of) creative new businesses.
4.0 Concluding Remarks
Open obtainment plots normally have an expansive built up firm predisposition, because of
lower levels of exchange costs: acquirement to a huge arrangement of little and new firms
brings about more inquiry costs, contract expenses, and control costs. This issue is significantly
more extreme when the obtained great or service includes abnormal amounts of vulnerability
and numerous elusive resources, just like the case more inventive items.
Opening up such plans to youthful and little firms may expand exchange costs for open
acquisition. However, it may build the extent of answers for open issues, and if composed
appropriately this does not have to add up to costs for the advancement of new arrangements.
Governments at the national level could all the more every now and again make utilization of
open acquisition programs like the Small Business Innovation Research (SBIR) program: an open
acquirement program to subcontract socially important (i.e. satisfying an open need) creative
innovative work to independent ventures. Adjustments of this program may be expected to
execute this at the nearby level. This may be tied in with endeavors on the nearby level to
empower social entrepreneurship, i.e. entrepreneurship to take care of societal issues. More
research is expected to pick up knowledge into the impacts of the plan of these obtainment
plans, and the structure of entrepreneurial ecosystems all the more comprehensively to
upgrade gainful entrepreneurship.

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