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African Journal of Science, Technology, Innovation andDevelopment

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A poverty-reduction oriented perspective to smallbusiness development in South Africa: A humancapabilities approach

P. Rambe & L. Mosweunyane

To cite this article: P. Rambe & L. Mosweunyane (2017): A poverty-reduction oriented perspectiveto small business development in South Africa: A human capabilities approach, African Journal ofScience, Technology, Innovation and Development, DOI: 10.1080/20421338.2017.1322749

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A poverty-reduction oriented perspective to small business development in South Africa: Ahuman capabilities approach

P. Rambe* and L. Mosweunyane

Department of Business Support Studies, Central University of Technology, Bloemfontein, South Africa*Corresponding author Email: prambe@cut.ac.za

Despite the South African government’s strategic policy interventions and huge investments into small businessdevelopment over the past two decades, solid evidence of the transition of informal businesses to the formal sector ishard to encounter. Furthermore, the high rates of unemployment in the country point to the growing incapacity of small-scale, micro and medium enterprises (SMMEs) to address the chronic social ills of poverty, inequality and socialdeprivation ravaging the country. Building on mainstream literature on the government interventions designed topromote growth without equity among SMMEs and Sen’s capabilities approach, this theoretical study advances apoverty-reduction approach to entrepreneurship underpinned by a systematic integration of multiple-level conversionfactors, sustainable resourcing (especially seed funding and managerial capacity development), commercialization ofbusiness activities, a strong entrepreneurial orientation and solid managerial capabilities. Such an integrated approachwas deemed to strengthen the capacity of SMMEs to survive the competition from established commercialised enterprises.

Keywords: small business, entrepreneurship, entrepreneurial orientation, poverty reduction

IntroductionWhile the South African economy is often hailed as one ofthe most successful efficiency-driven economies, Blaine(2013) laments that its society is ranked among the mostunequal societies in the world (Blaine 2013) due to itssoaring poverty and unemployment levels. In view ofthese challenges, the government has instituted supply-side interventions such as: providing employment subsi-dies and incentives to companies that employ the youth,rendering youth training programmes, providing directpublic sector employment opportunities, availing entrepre-neurial schemes and employment services for job search,job matching and sanctions (Mayer 2011; National Treas-ury 2011).

In spite of the multiple interventions that the SouthAfrican government has instituted to roll back unemploy-ment and poverty, the national unemployment figures inthe country still hover around 24.5% (Verster 2016).Since the government is unable to contain the currentwave of youth unemployment at a pace faster than thegraduation rates of students coming from educationalinstitutions and the dropout rates (from secondary and ter-tiary institutions), Sindhu et al. (2010) highlight that thegovernment conceives new venture creation among theyouth as an alternative to formal employment. In addition,the literature reports that the South African government isalso committed to promoting and growing of smallbusinesses to eradicate poverty, and eliminate social depri-vation and social inequality (Ferreira 2007; Fatoki 2014).

Although small-scale, micro and medium sized enter-prises (SMMEs) can contribute immensely to thereduction of national poverty, the government and thepublic alike are deeply concerned about the rate atwhich emerging businesses are collapsing or folding oper-ations. Turton and Herrington (2012) posit that SouthAfrica’s established business survival of 2.3% is thesecond-lowest in the world. This claim buttressesRozyn’s (2007) earlier view that only 12% of small

businesses established in the country survive their firstfour years of establishment, itself a clear testimony tothe undesirability of the South African businessenvironment.

While the contribution of SMMEs to the nationaleconomy is uncontested, their capacity to reduce povertylevels is unclear. Although the SMME sector accountsfor 42% of gross national product (Small EnterpriseDevelopment Agency (SEDA) 2016) and 61% of totalemployment (SMME Opportunity Road Show 2016) ofSouth Africa, the sustained credibility of this sectordepends on its capacity to transform its entrepreneurialposture radically by embracing an inclusive, broad-basedapproach to poverty reduction. In fact, scholars considerthe development of SMMEs with strong entrepreneurialorientations as one of the panaceas to soaring unemploy-ment, poverty and social inequalities (see Rozyn 2007;Tengeh 2011). Rozyn (2007) elaborates that the expansionof entrepreneurially oriented small businesses fosterseconomic growth and creates employment opportunities,which are critical to the survival of emerging economies.Tengeh (2011) concurs that an amalgam of a thrivingsmall business economy and a strong entrepreneurshipspirit is the driving force behind the success of all econom-ies worldwide. The pre-occupation of world governmentswith SMME entrepreneurship is founded on the relativeease with which SMMEs in this informal or quasi-formal sector adopt innovative initiatives and the associ-ated low cost of creating jobs in that sector (Ferreira2007; Agbobli 2013; Agbotame 2015).

Consistent with our advocacy for strong entrepreneur-ial capabilities to support a poverty-reduction approach toSMME development, we argue that Sen’s capabilitiesapproach provides useful theoretical and interpretivelenses for conceptualizing and understanding SMMEdevelopment in job-scarce and resource-constraineddeveloping contexts. To the extent that Sen’s capabilitiesapproach emphasizes what humans are capable of being

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and becoming, drawing on finite resources and capabilitiesavailed to them in their complex environments (see Sen1983, 1989; Nussbaum 2011), his perspective provides auseful framework for advancing certain levels of well-being (Pramono and Woltjer 2011). Given this approach’sfocus on the capabilities of humans to transform intellec-tual, financial and natural resources into outputs whichthey value considerably, Sen’s (1983) theory presents auseful explanatory framework for understanding howsuch endeavours (i.e. capabilities and functionings) areinstrumental in expanding the provision of goods and ser-vices necessary for human development. As such, thehuman development perspective embedded in the capa-bilities approach is consistent with this paper’s deliberatefocus on poverty reduction in resource-scarceenvironments.

Functionings mirror a person’s actual use of the com-modities at his or her command while capabilities reflect aperson’s ability to achieve a given functioning (doing orbeing) (Clark 2006). In view of these definitions, apoverty-reduction approach to promoting entrepreneur-ship aptly captures existing and aspiring entrepreneurs’commitment to deploy essential intellectual, financialand material resources and capabilities to expand andsustain their own functionings and those of their surround-ing communities. The argument of this paper, therefore, isthat to the extent that entrepreneurial-oriented SMMEsoften demonstrate expanded capabilities of individuals(e.g. employees and community members) and sustainedgrowth, such enterprises are ideal for rolling back the fron-tiers of poverty and unemployment, if they are managedeffectively.

Problem statementThe problem is that while the South African governmentadvances entrepreneurship as one of the fundamentalpillars for confronting poverty and unemployment headon (Mayer 2011; National Treasury 2011; Small Enter-prise Development Agency (SEDA) 2016), the significantgrowth in the numbers of SMMEs has not contributed to asharp decline in poverty levels in the country. For instance,while there are approximately 1,497,860 informal SMMEsin South Africa (SEDA 2016) geared to create employ-ment opportunities, the Poverty Trends Report releasedin 2014 revealed that South Africans living below thefood poverty line (FPL) hovered around 20.2% of thetotal population (Statistics South Africa 2014). Thisirony of the burgeoning numbers of SMME establish-ments and soaring poverty levels in the country possiblydemonstrates the limited production efficiency ofSMMEs and their low conversion of economic opportu-nities into durable life-sustaining functionings andcapabilities.

Perhaps, another striking feature of an entrepreneuriallandscape that is devoid of poverty-reduction approachesin South Africa is the dominance of counterproductivesupply-side interventions with limited discernible out-comes for SMMEs. For instance, while the multiple pro-grammes aimed at advancing entrepreneurship in SouthAfrica may have boosted the SMME pipeline and savedsmall firms from collapse, there is no consonance

between new venture creation and poverty eradication inthe country. For example, government interventions suchas the provision of loans to young entrepreneurs, provisionof business development services, rendering of support toyouth cooperatives and the introduction of youth entrepre-neurial training in schools (Mayer 2011) have had aninconsequential effect on breaching social inequalities inthe country. Statistics South Africa (2014) warns thatwhile the poverty situation seems to be under control,the levels of inequality between the rich and the poor isgrowing alarmingly. South Africa’s Gini coefficient of0.65 in 2014, which policymakers, academics and entre-preneurs rank among the highest in the world, remains aconcern in society. More so, the contrast of national con-sumption of the have and have nots of the country isvery disturbing – while the richest 20% of the populationaccounted for over 61% of consumption in 2011, the con-sumption levels of the bottom 20% shrank from 4.4% in2006 to 4.3% in 2011 (Statistics South Africa 2014). Tothis effect, we wondered about: (1) The nature of businessorientations of SMMEs that could make the prevailingpoverty in South Africa history; (2) the capabilities set(i.e. resources, functionings, capabilities and conversionfactors) that profoundly shapes the implementation ofpoverty-reduction oriented ventures; and (3) the consti-tution of a model that would enhance the wellbeing ofpoverty-oriented enterprises in South Africa. Consistentwith this reasoning, this study addresses the followingquestions:1. What forms of business orientations of SMMEs can

effectively alleviate poverty levels in South Africa?2. Which capabilities set (that is, a combination of

resources, functionings, capabilities and conversionfactors) shapes the operation of poverty-reductionoriented enterprises in South Africa?

3. How can a model informed by a capabilities set (i.e.resources, functionings, capabilities and conversionfactors) be constituted to support the wellbeing ofpoverty-oriented enterprises in South Africa?

MethodologyIn the absence of comprehensive empirical studies thatexplore the intersection among entrepreneurship orien-tation, poverty-reduction oriented businesses and ahuman capabilities approach, a theoretical approachwhich draws on fragmented literature covering these con-cepts, researchers’ personal perspectives and anecdotalevidence on entrepreneurship drawn from the SouthAfrican context, best suits this investigation. For Wacker(1998), a theoretical research considers a definition ofvariables, builds internally consistent relationshipsamong these variables, and, sometimes, makes specificpredictions about these relationships. The current studyseeks to develop a model of poverty reduction-orientedSMMEs founded on a systematic integration of a strongentrepreneurial orientation, solid managerial capabilities,sustainable resourcing, commercialization of businessactivities and capacity development of SMME managers’skills. The proposed model will present the relationshipsamong these variables and predict their influence on the

2 Rambe and Mosweunyane

wellbeing (especially sustained employment creation,profitability and poverty reduction) of such SMMEs.Theoretical researches emphasize a reflection on previousfragmented research and runs no methodological pro-cedures owing to a lack of empirical data (George StateUniversity 2015). As such, the current study draws onthe patchy literature on the concepts identified, theresearchers’ personal thoughts and their subjective inter-actions with the literature on these concepts to developan integrated model of poverty-reduction orientedSMME development.

Theoretical frameworkA capabilities approach to poverty-reduction orientedentrepreneurshipA capabilities approach acknowledges the centrality of adiversity of economic, social, financial and other materialcapabilities in realizing the wellbeing of individuals andcommunities on one hand (see Sen 1983, 1989; Nussbaum2011), and people’s abilities to transform resources intooutputs on the other (see Fukuda-Parr 2003; Clark 2006;Mutanga and Walker 2015). Therefore, this approachrenders a useful theoretical lens for interrogating the capa-bilities set that shapes the operation of poverty-reductionoriented enterprises in South Africa. By the same token,a capabilities approach’s emphasis on practical appli-cations (i.e. doings) and business identities (that isbeings) makes it an ideal interpretive lens for locatingbusiness orientations that give effect to poverty reductionin the country. Therefore, a capabilities approach is recog-nized as an appropriate theoretical framework for unravel-ling the entrepreneurial issues under investigation. Thefollowing sections discuss the different constructs thathave resonance with the human capabilities approach.

CapabilitiesThe human capabilities approach (HCA) regards capabili-ties as opportunities for human beings to flourish orachieve wellbeing – to do and to be what they havereason to value (see Walker 2006; Bozalek and Dison2013). For entrepreneurs, opportunities to flourish areunderpinned by possession of relevant entrepreneurshipcompetencies, capabilities and abilities, which have thepotential to increase the profitability and market size oftheir business, increase employment opportunities andreduce poverty levels as well as reduce environmentaldegradation in local communities. A human capabilitiesapproach takes cognizance of the socio-economic posi-tioning of prospective and actual entrepreneurs, their indi-vidual beings and what they can do with their personal,material and social resources, rather than merely lookingat what resources these entrepreneurs possess and assum-ing that all entrepreneurs are equally positioned in relationto these resources (e.g. Rawls 1971; Bozalek and Dison2013). Therefore, entrepreneurship debates that considerthe availability of the material resources (e.g. adequatefinancing, human resources, business premises) exclu-sively as predictors of SMME success but negate the entre-preneurial capabilities that entrepreneurs bring to bear ontheir encounters with new venture creation and entrepre-neurship, are not only insufficient for explaining the

entrepreneurial journey but are potentially misleading.Since a HCA develops an explicit interest in the individ-ual’s freedom to choose and act (Wilson and Martin2015) entrepreneurially whilst attempting to answer thequestion ‘What is this person able to do and be?’ (Nuss-baum 2011), it provides a useful point of departure forunderstanding the forms of business orientations ofSMMEs that can arrest the glaring poverty situation inSouth Africa.

Entrepreneurial capabilitiesAlthough Sen (1983) foregrounds capabilities in generaland not entrepreneurship capabilities per se, the fact thatentrepreneurship implicates the latter concept qualifies itas a subject of investigation of this study. To the extentthat entrepreneurship emphasizes developing and dissemi-nating important innovations to the public through cre-ation of business ventures that are quick to act, directand flexible (Dyal-Chand and Rowan 2014), this practicecannot be distanced from the possession of an appropriateapplications of entrepreneurial capabilities and competen-cies in competitive, resource-constrained contexts. Moreso, since entrepreneurship ‘captures a spirit of individual-ity capable of exploiting market conditions for the benefitof both entrepreneur and consumer’ (Dyal-Chand andRowan 2014, 841; Initiative for Competitive Inner City2014), individuals who possess this rare, non-universalspirit are well positioned to perform better entrepreneu-rially than their counterparts. Entrepreneurial capabilities,therefore, serve as one of the bedrocks of successful entre-preneurship in emerging African economies.

In view of the entrepreneurial gaps that are prevalent inemerging economies, the development of entrepreneurialcapabilities, competencies and abilities is fundamental tothe successful entrepreneurial development of emergingfirms in South Africa. Improving entrepreneurial capabili-ties and strengthening the managerial competencies ofentrepreneurs are instrumental in igniting entrepreneurshipdevelopment processes that contribute to the advancementof an entrepreneurial culture (Vis 2012; Naudé 2013). Sus-tainable eradication of poverty demands the expansion ofentrepreneurship capabilities of entrepreneurs through:. Broadening the entrepreneurial choices available toentrepreneurs;

. Increasing the real freedoms of prospective entrepre-neurs to gain entrepreneurial knowledge and skills;

. Providing socio-economic institutional arrangementsthat increase the business opportunities of prospectiveentrepreneurs;

. Improving the lifelong learning opportunities ofentrepreneurs;

. Developing some positive perceptions of women entre-preneurship among society members; and

. Developing government policies and strategies that raisethe status of entrepreneurship in society (Vis 2012).

Applying capabilities in contextIn view of the high unemployment statistics (at 26%) inSouth Africa (see Statistic South Africa 2014) that,perhaps, point to weak entrepreneurial capabilities in the

African Journal of Science, Technology, Innovation and Development 3

country, contemporary literature recognizes the humancapabilities approach as a useful development policy frame-work for poverty reduction, sustainable development,gender inequalities and governance (United Nations Devel-opment Programme (UNDP) 1997, 1998, 2000, 2002;Fukuda-Parr 2003). Sen’s conception of enriching humandevelopment embraces functionings and capabilities, therange of things that a person could do and be in her life,which human development reports are now capturing asexpanding choices (Sen 1989; Fukuda-Parr 2003). Assuch, the human capabilities approach (HCA) serves asone of the most powerful characterizations of a poverty-reduction oriented approach to entrepreneurship due to itsradical departure from the economic, quantitative, materia-listic indicators often glorified in early reports of the WorldBank, which are insufficient for capturing the wellbeing ofhumans holistically. On the contrary, it recognizes theimportance of embracing material as well as non-material,invisible traits, such as entrepreneurial capabilities, func-tionings and ways of being. As Pramono and Woltjer(2011) argue, economists and academics should translatewellbeing into a set of practical indicators in order tomeasure development progress and replace material, quan-titative, economic indicators such as gross domestic productor income.

Functionings and conversion factorsFunctionings are beings and doings, which people valueconsiderably (Bozalek and Dison 2013), and theseshould be distinguished from the commodities employedto achieve them (Wells 2016). Beings include being anentrepreneur, innovator or inventor, or being creativeand proactive, which are positively associated with thedoings such as enterprising, innovating, creativity andproactivity.

Conversion factors refer to the ability of the individualto translate resources into desired functionings, and theycomprise three categories, namely: personal or internalconversion factors, social conversion factors and environ-mental conversion factors (Robeyns 2011). From an entre-preneurial perspective, prospective and actualentrepreneurs may value the following desired function-ings: demonstrating creativity and innovativeness,having financial independence, developing social inno-vations that reduce poverty and creating employmentopportunities that advance the social development of com-munities. Internal conversion factors may comprise entre-preneurial efficacy, entrepreneurial experience andentrepreneurial exposure, including their power of creativ-ity and innovation. Social conversion factors may includethe positive and negative social dynamics that enable orhinder entrepreneurship such as social prejudice, psycho-logical access to and participation of the entrepreneur intechnical and business subjects at tertiary level, businessnetworks and the existence of family role models thatembrace entrepreneurship endeavours. The environmentalfactors may capture the institutional and macro-economicfactors that drive or hinder entrepreneurship such asnational business-funding policies, business-training pro-grammes and the level of recognition of entrepreneurshipregionally and nationally.

Literature reviewPoverty and poverty reductionA consensual description of poverty is controversial dueits multidimensional nature and the diversity of its defi-nitions. The Organization for Social Science Research inEastern and Southern Africa (Hick 2012) conceivespoverty as enforced lack or deprivation of materialresources for a certain duration to the extent that partici-pation in normal activities and access to amenities andliving conditions which are customary, or at least widelyencouraged or approved of in society, become impossibleor very limited. This economic approach to poverty is con-sistent with that of international development agenciessuch as the International Monetary Fund and WorldBank, which conceive poverty predominantly from theperspective of consumption and functioning of humansbelow the poverty datum line. The expanded definitionof the World Bank (2014) regards poverty as a multi-dimensional concept whose meaning, causes and signifi-cance vary according to gender, age, culture, and othersocial and economic contexts. For instance, in rural andurban Ghana, men associate poverty with a lack ofmaterial assets, whereas women define it as food insecur-ity (Boateng, Boateng, and Bampoe 2015). Intergenera-tional differences also persist in the characterization ofpoverty. Younger men in Ghana consider the ability togenerate an income as the most important asset, whereasolder men cite a traditional agricultural lifestyle as themost important status (Ghana 1995; Tham-agyekum,Amamoo, and Botchey 2016).

A deeper understanding of the extent of povertydemands a context-informed examination of the preva-lence of poverty. Mbuli (2008) reports that about 45–57% of the national population of South Africa was over-whelmed by poverty in 2008. Judging from the statistics inTable 1, the number of South African citizens reelingunder poverty has not improved six years after Mbuli’s(2008) observation.

In the South African context, low-income jobs, unem-ployment, landlessness and confinement to urban ghettosthat lack basic access to amenities are some of the chiefcauses of poverty (Phogole 2010). Identifying with thisfocus on economic conditions and access to means of pro-duction, Nkwede (2013) attributes poverty to a lack offinancial, human and physical necessities capable of creat-ing a suitable environment for sustainable living stan-dards. Poverty can also arise from productiondeficiencies and constrained support systems. Adenutsi(2009) asserts that poverty may be a consequence of lowproductivity of the households, limited access to financeand a lack of other economic and social incentives forentrepreneurship.

Table 1: Poverty statistics in South Africa.

Poverty headcounts 2011Percentage of the population that is poor 45.5%Number of poor persons (millions) 23.0Percentage of the population living in extreme poverty 20.2%Number of extremely poor persons (millions) 10.2

Source: Statistics South Africa, 2014

4 Rambe and Mosweunyane

Dimensions of poverty, therefore, can extend from anexclusive economic focus on surviving on less than oneUS dollar a day to comparative terms such as the lowerproductive and intellectual capabilities of vulnerablegroups compared with other groups. The South Africangovernment’s supply-side approaches, which tend toemphasize provision of funding for new start-ups with alimited consideration of the entrepreneurial capacities ofthe small business manager/owners or the entrepreneurialorientation of the businesses, seem to negate this compara-tive approach.

Although the South African government has institutedmany policy initiatives such as provision of grants andsubsidies, creation of youth empowerment centres andthe National Youth Development Agency’s provision ofstart-up funding for SMMEs to roll back the frontiers ofpoverty, multiple fissures remain as far as forging entrepre-neurial orientation among SMMEs is concerned. Whilethe Poverty in South Africa Discussion Document(2008) makes radical claims about the government’s main-streaming of anti-poverty initiatives, its poverty-reductionplanning, the extensive implementation of governmentprogrammes and provision of budgetary support, Table 1statistics seem to contradict this comprehensive shift inpoverty levels.

A comparison of SMMEs and entrepreneurshipAlthough there is no generic definition of an SMME due tothe varying industrial clusters in which these SMMEs arelocated (Agbotame 2015; Ndofirepi 2016), firms’ salesvolumes and number of employees often provide usefulcriteria for classifying these enterprises (Tushabomwe-Kazooba 2006; Dzansi and Pretorius 2009; Agbobli2013). Thompson (2006) defines a small business as anyorganized effort projected to yield a profit through pro-vision of small products or services to outside groups.However, Dzansi (2004) and Nieuwenhuizen (2012, inNdofirepi 2016) clearly differentiate small business fromentrepreneurship (itself the domain of large corporations),as they consider an SMME to be small and lacking thepotential for growth and innovation. Therefore, the dis-tinction between small business and entrepreneurshiplays in innovation, growth potential and broad vision(Dzansi 2004; Watson 2004; Nieuwenhuizen 2012; Ndo-firepi 2016). We infer from these definitions thatSMMEs are similar to large corporations by virtue ofbeing legal entities, seeking profit and having independentownership. The subtle differences between large corpor-ation and SMMEs lie in their size, capacity to exploitmarket opportunities fully and engage in innovation. Thedevelopment of poverty-reduction oriented SMMEs,therefore, depends on the ability of SMMEs to transitiontheir survivalist orientation through their optimal exploita-tion of market gaps, the production of products/services ona massive scale and the implementation of organizationalinnovations.

While entrepreneurship requires a business to engagein innovation to close existing market gaps in the pro-vision goods or services and the expansion of the enter-prise in capital size, profits and number of employees,SMME owners/managers may not necessarily bear these

issues in mind at the SMME conception stage. Thisshort-sightedness is a consequence of the necessity andsurvivalist orientation of most SMMEs. As such, mostSMMEs may lack the capacity to reduce poverty drasti-cally through creating employment and life-sustainingopportunities to surrounding communities.

An overriding observation is that entrepreneurs requirecreative and innovative skills to start profitable organiz-ations and bear the inherent risks of venture creation(Dzansi 2004; Griffiths et al. 2012; Mayhew et al.2012). As such, poverty-reduction oriented SMMEsshould have a strong creativity and innovation orientationfor them to generate decent jobs, empower individuals andlift their surrounding communities out of stressful povertysituations. The preoccupation of entrepreneurship withopportunity recognition, creativity, bearing economicrisks and profit optimization (Thompson 2006; Havinal2009) makes it a best fit for poverty reduction. This ispartly because the consequences of entrepreneurship andpoverty-reduction oriented SMMEs transcend the econ-omic benefits (e.g. employment creation, income gener-ation) to include social empowerment, capacity buildingand transformation of lives. The insinuation that entrepre-neurial firms are comparatively more risk-taking and focusmore on innovation than small businesses, which arecontent with marginal profits and business-as-usualapproaches (Carland et al. 2007; Ndofirepi 2016), makesentrepreneurial firms more relevant to poverty-strickencontexts of developing economies.

Entrepreneurial orientationAlthough SMMEs may be products of entrepreneurship,not all SMMEs have a strong entrepreneurial orientation.The entrepreneurial orientation (EO), which is attributedto the work of leading researchers (Miller 1983;Lumpkin and Dess 1996; Covin and Slevin 1989), refersto the extent to which a firm is entrepreneurial in nature(Schillo 2011). SMMEs with a strong EO demonstratefive main attributes, namely: risk-taking, proactiveness,innovation, competitive aggressiveness and autonomy(Covin and Slevin 1989; Lumpkin, Cogliser, and Schnei-der 2009). While there is limited space to define each ofthese five attributes, it suffices to highlight that entrepre-neurship researchers hail EO as an extensive contributorto the success of the business (Mahmood and Hanafi2013) irrespective of its sector of operation. However,the capacity of EO to leverage SMME economic pro-ductivity has been ambivalent. Tobias, Mair, andBarbosa-Leiker (2013) posit that entrepreneurial-orientedSMMEs play a meaningful role in subsidizing povertythrough generating socio-economic progress, althoughthere is a disjointed understanding of the processesthrough which entrepreneurship produces social changeand creates economic wealth synchronously. Conversely,Kraus et al. (2012) state that EO is often perceived as aforebear of growth, competitive advantage and superiorperformance. These claims mirror Rauch et al.’s (2004)finding that EO constitutes an entrepreneurial strategy-making process that small business owners/managers useto enact their businesses’ organizational purpose, sustaintheir vision and create competitive advantage. Since EO

African Journal of Science, Technology, Innovation and Development 5

is instrumental in the creation of financial wealth and firmcompetitiveness, its capacity to open up employmentopportunities, create income, improve personal social net-works and other life-enhancing necessities is undisputable.For these reasons, the South African government canreduce poverty levels significantly by encouraging smallbusinesses to embrace and apply this concept diligently.Accordingly, Mason et al. (2015) affirm that EO signifiesthe policies and practices that provide a foundation forentrepreneurial decisions and actions, whose spillovereffect could be poverty reduction.

Entrepreneurially oriented small businessesConsidering the foresaid relationship between smallbusinesses and entrepreneurial orientation, it is logical toengage with entrepreneurially oriented small businesses.According to Wiklund, Patzelt, and Shepherd (2009)small businesses that are entrepreneurially orientated arethose willing to innovate in order to revive market offer-ings, take risks by attempting new and undefined pro-ducts/services and are more proactive than theircompetitors. Although the preceding observation presentsentrepreneurially oriented small businesses as economicbenefit maximizing entities, the enhancement of theiremployees’ managerial and financial capabilities, andsocial empowerment through the enactment of particularidentities (that is ‘beings’) could be additional socialbenefits for such businesses. To the extent that entrepre-neurship within a small business unfolds when the oppor-tunities are recognized and acted upon to improve thefinancial position of small business significantly (Thomp-son 2006), entrepreneurship is conceived as an antecedentof as well as a consequence of the wellbeing of the organ-ization. As Kruger (2004) observed, research often con-siders the starting of a small business as the foundationfor its growth, creativity and innovation, and developmentenhances its sustainability (that is the wellbeing of theorganization) without which the entrepreneurial orien-tation of the business is impeded. Needless to say, thecapacity of an entrepreneurial venture to work on creativeideas with significant risks drives it from being a smallentity to becoming a large enterprise (Sindhu et al.2010), whose social responsibility may include eradicatingthe poverty levels of local communities through expandedlifelong opportunities.

Linking entrepreneurship to poverty reductionSince we have explored the linkage between SMMEs andentrepreneurship on the one hand, and the nature of entre-preneurially oriented SMMEs and entrepreneurial orien-tation on the other, it is important to examine the nexusbetween entrepreneurship and poverty reduction. Entre-preneurship development can contribute to povertyreduction by creating income and employment opportu-nities through the creation of emerging businesses (Aliand Ali 2013). Authentic entrepreneurship should contrib-ute to social wealth by creating new markets, new indus-tries, new technology, new institutional forms, netincreases in real productivity and sustainable jobs necess-ary for the poor people to access income and meet their lifenecessities (Ali and Ali 2013). It is therefore logical to

assume there exists an inverse relationship between entre-preneurship and poverty reduction; that is, a massivegrowth in entrepreneurship should drastically reducepoverty levels. However, the employment opportunitiescreated should be sustainable, provide economic opportu-nities for transforming lives and capacitate individuals topursue self-reliance.

To the extent that Adenutsi (2009) argues that econ-omic growth is an essential pre-condition for povertyreduction, this paper argues that creating entrepreneurial-oriented firms is a precondition for incubating sustainablejob opportunities and human capabilities that potentiallytrigger poverty reduction and emancipation of economi-cally marginalized groups. Nkwede (2013) concurs thatto reduce poverty means to improve and sustain the econ-omic and social growth of the masses, which enhance theirliving standards. The challenge, however, is that the SouthAfrican government’s supply-side interventions forSMME support and development seem to focus predomi-nantly on growth of SMMEs without creating life-chan-ging economic conditions and developing the humancapital capacities and capabilities, which enable the fullemancipation and self-sustenance of human beings. Forinstance, an overemphasis on the public financing ofSMMEs and the development of sound business planswith a limited consideration of SMME resource manage-ment training and risk management reduces SMMEpublic funding policies to growth-without equity interven-tions. We argue that when the government considers entre-preneurship in conjunction with demand-sideinterventions relating to personal capacity developmentand skill enhancement, then it will be more rewarding toboth the entrepreneur and the broader social communityin which SMMEs operate.

Sustainable seed fundingConsistent with Sen’s HCA, this study assumes thatresources of a financial nature are critical determinantsof the wellbeing of poverty-reduction oriented firms.Despite the acknowledged significance of seed fundingto the establishment and survival of such firms, SouthAfrican banks and other financial institutions oftendecline SMMEs’ applications for funding for variousreasons such as lack of financial records and lack of asolid credit history. Since SMMEs that implement theirbusiness activities immediately upon receiving fundingare more likely to run successful programmes than theircounterparts (Higgins, Naylor, and Day 2008), sustainablefunding relates positively to business performance.

In spite of the claim about the positive relationshipbetween funding and SMMEs success (Abdulsaleh andWorthington 2013), the South African experience presentsan inverse relationship between funding and business per-formance. Increased aggregate funding of SMMEs con-tinues to be associated with increased SMME closures(see Fatoki 2014). For instance, while the South Africanfunding to SMMEs increased from R242.6 million toR646.5 million in the years 2011 to 2012, South Africalost 440,000 small businesses in the five years leading to2012 (Grovest 2013). This anomaly cast aspersions onwhether increased funding to SMMEs enhances the

6 Rambe and Mosweunyane

performance and survival of these entities. Whileincreased funding to SMMEs may contribute to improvingtheir productive capacity and entrepreneurial culture ofSMMEs, the foresaid unfortunate scenario of SMME clo-sures raises critical questions on whether SMMEs areeffective tools for job creation and poverty reduction.

Financial resources and financial literacyThe provision of seed funding (e.g. start-up capital) shouldbe complemented by continual provision of sustainedfinancial resources (e.g. working capital) to ensure thatthe business wellbeing is enhanced. For instance, evidencefrom prior research indicates that the availability of finan-cial resources moderates the relationship between entre-preneurial orientation and firm performance (Wiklundand Shepherd, 2005; Adomako and Danso 2014). Thus,access to sources of financing may play the roles of proxy-ing for financial capacity as well as providing a signalabout the quality of future sustained profitability andemployment of the businesses (Adomako and Danso2014). Furthermore, Sjauw-Koen-Fa and Vereijken(2005) concur that access to financial services is one ofthe keys to business profitability and increased employ-ment of communities, which may contributed directly topoverty reduction.

However, there are specific scenarios in which provid-ing funding is vital for poverty reduction. This is becausesome funding can simply keep unsustainable businessesalive while having no impact on poverty reduction. Forinstance, Mokgosi’s (2017) survey on the impact of demo-graphic (i.e. age and gender), institutional (family rolemodels, family recognition of venture creation) and struc-tural factors (e.g. marketing and financing, social preju-dices) on the sustainability of technology orientedSMMEs (i.e. internet cafés) revealed a negative relation-ship between sustained funding and level of opportunityidentification (coefficient = −0.237). This was interpretedto mean that entrepreneurs tended to relax and cease tobe imaginative after receiving the funding comparedwith when they were starting their business ventures.This would, therefore, negatively impact businessgrowth and their capacity to employ additional staff,which would negatively affect their contribution topoverty reduction.

Another scenario is that even with increased financialavailability, financial literacy is a moderating factor to thesuccess of the business and therefore income generationand poverty reduction. Neneh (2016) examined the influ-ence of financial literacy on firm performance, and themoderating effect of financial capital availability on thefinancial literacy–performance relationship amongstSMMEs in the Free State province of South Africa. Herstudy revealed that on average SMME have low levelsof financial literacy and financial capital availability. Itwas also observed that financial literacy positively influ-enced SMME performance, and that the relationship ispositively moderated by financial capital availability. Itcan be inferred that access to funding by SMME owner/managers with limited or no financial illiteracy couldeven have an increased negative effect on business per-formance, limit the businesses’ growth potential and,

consequently, compromise poverty-reduction intentionsof these businesses

Environmental stabilityThe relationship between entrepreneurship orientation andfinancial performance of SMMEs is context dependent. Kur-tulmuşa and Warner (2015) examined the role of entrepre-neurial orientation (EO) on the perceived financialperformance of small- and medium-sized enterprises operat-ing within volatile business environments. Their findingsdemonstrate that though there is a relationship betweenEO and perceived financial performance of SMMEs, thispositive relationship is not effective for those businessesoperating in volatile business environments. Therefore, theEO-financial performance relationship can be influencedby the dynamism or hostility of the environment, regardlessof accessibility of financial resources. In support of thisview, Kraus et al. (2012) and Neneh (2016) posit thatenvironmental factors impact positively or negatively onthe success of the business. Thus, the environment isalways highlighted as a critical contingency or contextualfactor in the EO-performance relationship (Martins andRialp 2011). Businesses functioning in a stable environmentwith low financial capital can increase their performancefaster than those with high capital accessibility in dynamicor hostile environments (Milovanovic and Wittine 2014;Kurtulmuşa and Warner 2015; Neneh, 2016). Further,some funding can simply keep unsustainable businessesalive, while having no impact on poverty reduction. Anexample is a business where funding keeps the businessgoing despite a persistent hostile business environment inwhich costs of raw materials and overheads (e.g. employeesalaries) are skyrocketing.

Commercialization of business activitiesSince functionings are ‘doings’ which human beingsvalue, one doing which entrepreneurs envision and valueis the commercialization of their business ventures. Com-mercialization of business activities influences the com-petitive advantage of SMMEs positively. For instance,Kang et al. (2013) posit that technology commercializa-tion is a key competitive factor for technology-basedbusinesses. Although their finding relates to technology-oriented firms, this revelation also resonates with otherSMMEs, as commercialization improves the productionefficiency and reduces the cost of resources required perunit. Furthermore, Van de Vrande et al. (2009) argue thatthe commercialization of small businesses may increasetheir capacity to meet customer demands and keep upwith competitors. This understanding seems to coherewith the view that commercialization of business positionsthe business not only for growth but also enables thebusiness to meet its broader social responsibility goalssuch as eradicating poverty.

Other studies have emphasized the relationship betweencommercialization and innovation. For instance, Hossain(2015) highlights that commercialization at the businesslevel is an essential part of the system of innovation,which means that aligning commercialization objectiveswith the innovation chain may richly benefit the competi-tiveness of SMMEs. However, Kang et al. (2013) affirm a

African Journal of Science, Technology, Innovation and Development 7

reverse relationship, where innovative capabilities andinvestment in external research and development (R&D)exert positive effects on the commercialization ofSMMEs. More so, firm size and the degree of governmentsupport weigh heavily on the commercialization of smallbusinesses (Kang et al. 2013). It is for this reason (i.e. firmsize) that small businesses are ideal for introducing creativ-ity, even though they often lack the necessary resources forcommercialization (Lee et al. 2010).

Strong managerial approachesWhile a functioning such as commercialization of smallventures is instrumental in the attainment of their wellbeing(e.g. competitive advantage, innovation, meeting consumerdemands), the success of the commercialization processhinges on other functionings such as the managerialapproaches of the business. Managerial approaches speakto the management philosophy, and the managerialsystems, processes and procedures that a firm institutes todrive production/service provision activities and to ensurethe integrity of its operations. Yet the weak managerialapproaches of SMMEs is one of the chief reasons for thefailure of small businesses sustaining themselves in SouthAfrica (Papulová and Mokroš 2007). Since the competitiveadvantage of firms depends largely on the quality andstrength of their organizational and managerial processes(Teece, Pisano, and Shuen 1997), addressing managerialcompetencies is critical to organizational performance.Governments’ support programmes for small enterprisesshould consider how to increase the significance ofmanage-rial skills and knowledge, and support the development ofintegrated education and courses for small entrepreneurs(Papulová and Mokroš 2007). This will assist smallbusinesses to be self-sustainable and competitive.

Another interesting dimension is that simply addres-sing skills training for SMMEs is not a panacea for thecurrent high levels of SMME under performance and fail-ures that are being recorded in many developing countries,including South Africa (Bjorvatn and Tungodde 2012;Duflo et al. 2013). Different types of training have differ-ent impacts depending on what the businesses intend thattraining to accomplish. For example, firms that take mar-keting training tend to achieve performance by increasingsales and employment growth, whereas firms that under-take finance training focus on cutting costs to increase per-formance. It is clear, therefore, that the former might havea greater influence on poverty reduction if the goal isemployment creation, while both could be important ifthe focus is profitability.

More so, strengthening approaches of small firms needsto be considered in conjunction with improved marketingand financial training, as the performance of SMMEs inSouth Africa is undesirable. A randomized trial study inSouth Africa conducted by Anderson-Macdonald, Chandy,and Zia (2013) showed that marketing and financial trainingcould improve the performance of SMMEs.

Capacity development of SMME managers’ skillsWhile managerial approaches focus specifically on man-agement philosophies and styles, capacity developmenthas a broader mandate of developing the entrepreneurial,

managerial and intellectual mind-sets and skills of man-agement and employees to improve the economic pro-ductivity, performance and sustainability of theorganization. Management capacity development is oneof the factors that plays a significant role in attaining thecompetitive advantage of a firm (Mmbengwa 2009) eventhough the development of small businesses in SouthAfrica is always constrained by weak institutional capacityand lack of management skills and training (Abor andQuartey 2010). Elaborating these revelations, SEDA(2012) posits that the main capacity building challengesat managerial levels hampering small businesses growthin South Africa are: lack of entrepreneurial skills andmind-sets, limited business acumen and constrainedcapacity to undertake market research resulting in a lackof understanding of market needs and characteristics.Small businesses in SAwould profit immensely from man-agement capacity development training to enhance theskills of their managers.

Theoretical and conceptual frameworksThis paper argues that the resources (such as sustainableseed funding from public institutions, capacity develop-ment of SMME managers’ skills) for the incubation andoperation of poverty-reduction oriented SMMEs are criti-cal but insufficient for the wellbeing (such as sustainedprofitability, increased employment opportunities, cre-ation) of poverty-reduction oriented SMMEs. The pro-vision of a sustainable pool of intellectual and financialresources should unfold in a business and macro-econ-omic context comprising an appropriate combination ofconversion factors (personal, social and environmental)factors and relevant functionings, if the wellbeing of theSMME is to be realized and sustained (see Figure 1)

We argue that personal conversion factors such as theSMME manager/owner’s entrepreneurial experience,entrepreneurial exposure and entrepreneurial efficacy donot operate in a vacuum to influence the creation and sus-tenance of small poverty-reduction oriented businesses. Tothe contrary, these factors work in tandem with social con-version factors. These include the social dispositions andprejudices of the family and community of the businessmanager/owner, the business owner’s psychologicalaccess to business concepts, processes and proceduresand the business owner/manager’ previous participationin technical and business subjects at tertiary level, theirbusiness networks and the existence of family rolemodels. Although social conversion actors shape themanager/owner’s self-efficacy and internal locus ofcontrol as far as business creation and operation are con-cerned, environmental conversion factors such as thenational entrepreneurial cultures and business funding pol-icies provide the broader milieu in which poverty-reduction oriented businesses may thrive.

We argue that moderating factors (resources) such asseed funding and capacity development as well as stableenvironment may influence the functions and capabilities.Hence Filser et al. (2014) posit that accessibility of seedfunding might increase entrepreneurial orientation byencouraging firms to be more risk-takers and proactivesince they have the available financial resources to do

8 Rambe and Mosweunyane

so. Through as it may, the capacity of the small firm to putequity and debt financing to effective use is dependent onwhether the firm is a growth-oriented firm or survivalist inorientation. Growth oriented firms tend to focus onemploying their financial knowledge and literacy toadvance the profitability and growth of the business(Mpiti, 2016) while survivalist may lack financial literacyand strategies to generate return on investment. Sincefinancial literary deals with knowledge and cognitivecapabilities necessary for managing and making effectivebusiness decisions (e.g. budgeting, bookkeeping, bills andutilities payments, loan acquisition and payments (Reichand Berman, 2015; Adomako, Danso and Damoah,2015), such a literacy mediates the entrepreneurialrelationship depending positively or negatively dependingon its abundance.

We propose that while resources in particular govern-ment interventions on managerial skills may moderate the

relationship between conversion factors on one hand,functionings and capabilities on the other, it is function-ings and capabilities that predate the outcome variablesnamely the wellbeing of the organization such as firmprofitability, employment opportunities and povertyreduction. Pramono andWoltjer (2011) posit that function-ings are a function of ability, commodity and circum-stances that make achievement of certain outcomespossible. Functionings underpin ways of beings such asbeing an entrepreneur, an innovator, inventor, being crea-tive and proactive, which are positively associated with thedoings such as enterprising, innovating, creativity andproactivity. That said, these functioning often manifestin the commercialization of the business venture andstrong managerial approaches of the businesses.

Therefore, while skills development can serve as mod-erating factors in the relationship between conversionfactors and wellbeing of small businesses (especially

Figure 1: Capabilities approach to poverty reduction-based entrepreneurship.

African Journal of Science, Technology, Innovation and Development 9

profitability and employment growth), it is important tounderstand that different managerial competences andskills are relevant for different businesses. As Makhale-mele’s (2016) study observes, for technology orientedbusinesses (in particular internet businesses) resourcemanagement capabilities were highly and significantlycorrelated with profitability (Correlation = 0.743, p-value= 0.000), followed by innovation management Capabili-ties (Correlation = 0.732, p-value = 0.000) and lastly mar-keting management capabilities (Correlation = 0.695, p-value = 0.000). Poverty-reduction oriented businessescould be highly related to the market management capa-bilities and innovation management capabilities as theseare integral to business growth, profitability and conse-quently, job creation and income generation which arecritical to poverty reduction. Therefore, the importanceof different managerial capacities varies depending onthe focus and sector the business operates in. For instance,Ramorena’s (2016) study of emerging construction firmssuggests that firm level capabilities (e.g. internal network-ing, social capital networks) and market level capabilities(external networking, innovation) significantly and posi-tively related to small business growth and profitability,compared to other capabilities.

Functionings work closely with particular capabilitiesset. Wilson and Martin (2015) define capabilities as afirm’s capacity to deploy resources, usually in combi-nation, using organizational processes, to effect a desiredend. For the purpose of this study, capabilities may com-prise an entrepreneurial orientation, entrepreneurial com-petencies, entrepreneurial capabilities, and businessnetworking abilities. We assume that the effective deploy-ment of this combination of capabilities in conjunctionwith the foresaid functionings will ensure the realisationof the wellbeing of the organization.

The skill combination and systemic integration of con-version factors, resources and capabilities and function-ings will lead to the realisation of SMMEs’entrepreneurial wellbeing. Such wellbeing may manifestin economic benefits such as entrepreneurial growth,explosive employment opportunities, poverty eradicationin addition to social benefits like promoting an egalitariansociety and eradication of social deprivation to mentionjust a few. Entrepreneurial wellbeing may also reflect inthe sustained profitability and increased market share ofthe businesses. The overall outcome should be multiplespill over benefits of entrepreneurship, which result inthe reduction of poverty in communities.

Observations and implicationsAlthough a country with a rich entrepreneurial culture isexpected to have low poverty levels, the South Africaexperience contradicts this assumption. This studyacknowledged with great concern the persistent disjunc-ture between an explosive growth of SMMEs establish-ments and the soaring poverty levels in South Africa,notwithstanding the claims about the capacity of SMMEdevelopment to eradicate poverty in society. For instance,while the number of SMMEs in South Africa totalled 5979 510 for the year 2011 (Mahembe 2011), the nationwas rated among the most unequal societies in the world

(Bosch et al. 2010; Rambe and Makhalemele 2015).Closely related to this irony, is another contradictionbetween the growing levels of public financial support toSMMEs and the high rate of SMME failures and a lowtotal entrepreneurial activity of the country. Statisticssuggest that 1 396 SMMEs were successfully funded forthe year 2011/2012 (Mogashoa 2015), there were 440000 estimated SMME closures between 2008–2012(Adcorp 2012). The aforementioned contradictions castaspersions on the effectiveness of a supply-side dependentpublic funding model for SMMEs. In other words, theSouth African government’s SMME developmentapproach, which hinges on provision of seed funding isinsufficient for ensuring the sustained performance andlong-term survival of SMMEs.

This study argued that while entrepreneurship and newventure creation goals emphasise the optimization of econ-omic benefits such as profitability, market share, sales,competitive advantage and competitiveness of thebusiness and income and employment opportunities forSMME employees, the social dimensions of poverty-reduction approaches are broader than these economicimperatives. Poverty-reduction approaches underpin thedifferent perspectives for promoting decent humanliving, thriving and survival such as developing strongmanagerial approaches, enhancing the skills base ofemployees, developing strong networking capabilities,entrepreneurial capabilities and capabilities for SMMEmanagers/owners. Collectively, these imperatives consti-tute the advancement of human functionings andcapabilities.

In view of the above arguments about the limitedscope of the economic dimensions of new venture creationand small business development, we argue that in its crudeform, new venture creation is insufficient for rolling backthe frontiers of poverty in resource constrained Africancontexts. Advancing this argument, our study argues thata human development index based approach to entrepre-neurship provides a comprehensive perspective to addres-sing the social dimensions of poverty reduction such asmeeting basic life necessities, reducing social inequalitiesand promoting individual empowerment.

To the extent that a human development index basedapproach to poverty reduction is founded on Sen’s(1983) human capabilities approach, we argue that anchor-ing entrepreneurial approaches in the HCA provides acomprehensive and context informed perspective tomeeting the economic as well as broader social develop-ment imperatives of individuals. The incorporation of aHCA into entrepreneurship would allow for the inclusionof multi-level conversion factors, resources, functioningsand capabilities into poverty-reduction oriented venturecreation. Even though entrepreneurship has proven to bea mechanism for creation of income and employmentopportunities (Garba 2012), we contend that it is a HCAthat creates life time economic opportunities, buildscapacities and capabilities for creating strong, sustainablebusiness institutions that will effectively combat poverty.

It is clear from the foregoing discussion that supply-side public interventions (e.g. provision of seed funding,skills enhancement) are critical but insufficient for

10 Rambe and Mosweunyane

realizing broader business social responsibility goals ofbusinesses such as reducing poverty, removing socialinequalities and empowering disadvantaged communities.While we support Adu and Cole’s (2015) claim that firmgrowth, which sustainable funding of SMMEs creates,has become the distinguishing factor between smallbusiness and entrepreneurship, the South African govern-ment’s preoccupation with the growth of SMMEs and itsdownplaying of the empowerment of the whole entrepre-neur has unintentionally created growth without equity.Entrepreneurship empowerment can be a consequence ofintegrated forms of training, mentorship and coaching inresource management, risk management, competenciesand capabilities enhancement. As such, HCA that capturesfirst level (functionings and capabilities) and second leveloutcomes is more useful for realizing poverty-reductionoriented entrepreneurship (see Figure 1). As Robeyns(2011) sums it up, a capability approach constitutes a sig-nificant improvement over average wellbeing approachesadopted in welfare economics.

Study limitationsWhile we provided a heuristic model for explicating thegrowth and complexity of poverty, we are conscious ofthe reality that what moderates the entrepreneurship andperformance outcomes relationship may also be informedby various factors. These include the type of poverty-reduction businesses, the sectors in which these businessesoperate, the level of maturity and resilience of suchbusinesses to internal and external pressures and theclimate stability (or predictability) and hostility of theenvironment.

Concluding remarksThe study noted with great concern the increasing gulfbetween the growth of SMMEs in South Africa and thedeepening poverty levels, notwithstanding the claimsthat SMME development alleviates poverty. We attributedthis irony to the government’s supply-side interventionsthat focus on growth without equity, especially its failureto consider a human capabilities approach to entrepreneur-ship. We argued that the incorporation of a HCAwould beinstrumental in not only realizing the economic impera-tives of increased profit, sales, market share and businesscompetitiveness, but also improve the social dimensionsof poverty reduction through improving SMME manage-rial competencies and entrepreneurial capabilities, deepen-ing their entrepreneurial orientation and increasing thecommercialization of their business activities. While weconcur with Kraus et al.’s (2012) claim that the changein complexity of customers globally complicates smallbusinesses’ capacity to improve business performanceunless they adopt EO in managing their business, weargue that the aforementioned functionings and capabili-ties will make EO more relevant to realizing povertyreduction in South Africa.

We question Hussain, Bhuiyan, and Bakar’s (2014)submission that the best remedy for poverty reduction inany country lies in inspiring more business activity andpromoting the start-up of the new ventures through entre-preneurship development. We argue that entrepreneurship

development is insufficient for reducing poverty, judgingfrom the growing poverty and inequality levels amid themushrooming of SMMEs and increased entrepreneurialactivity in South Africa. We argue that a HCA approachto entrepreneurship is a more dependable way of rollingback the frontiers of poverty in this country than the quan-titative, economic approaches of welfare economics.

Disclosure statementNo potential conflict of interest was reported by theauthors.

Notes on contributorsPatient Rambe (PhD) is a senior researcher in the Faculty ofManagement Sciences at the Central University of Technology(CUT), Free State in South Africa. Before this appointment, DrRambe served as an Assistant Director in the Office of Inter-national Academic Projects and as a Postdoctoral ResearchFellow in the Department of Computer Science and Informaticsat the University of the Free State. Dr Rambe has publishedextensively in the fields of Educational Technology and Entre-preneurship in developing economies. Dr Rambe’s researchwork has been widely acknowledged and is rated by the NationalResearch Foundation in South Africa.

Lentswe Mosweunyane is a lecturer in the in the Department ofBusiness Support Studies at the Central University of Technol-ogy (CUT), Free State in South Africa. He successfully com-pleted and graduated with a Masters in BusinessAdministration (cum laude) at the CUT.

ORCIDL. Mosweunyane http://orcid.org/0000-0001-5443-3053

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