Understanding entrepreneurship in the South African context: Insights from entrepreneurial risk attitudes of four major ethnic groups

Abstract

Researchers have been asking why some ethnic groups are more entrepreneurial than others. This question persists in South Africa where there are differing entrepreneurial outcomes based on ethnicity. In this study, we examine why some ethnic groups in South Africa seem more entrepreneurial than others. The paper draws attention to the possible role of attitude towards entrepreneurial risk as an explanatory factor for three reasons: (1) risk taking is regarded as an entrepreneurial behaviour; (2) risk taking has been found to differ due to demographic factors including ethnicity; (3) risk tolerance is associated with successful entrepreneurship. Understanding entrepreneurship across the different ethnic groups of South Africa therefore partially rests on understanding the risk-taking behaviours of the different ethnic groups. Unfortunately, the dearth of empirical research makes it difficult to know for sure how the various ethnic groups in South Africa respond to entrepreneurial risk. This leaves a void that this research attempts to fill. In this study, survey research data were collected from a sample of 400 entrepreneurs from the four main ethnic groups in a South African municipality. Results indicate significant differences among the four ethnic groups. This and other findings are presented and discussed accompanied by recommendations.

Keywords:

• entrepreneurial success
• ethnic diversity
• entrepreneurial risk
• South Africa
• risk tolerance

JEL classification:

• M13
• M14
• O17