Factors within the Business Regulatory Environment Affecting Entrepreneurial Activity in South Africa

Abstract

The existing literature on factors affecting the level of entrepreneurship in South Africa has focused mainly on factors such as lack of finance, lack of education and business skills, crime, poor infrastructure and support system, among others and their influence on starting and survival of new businesses in South Africa. Despite the widely held contention that the business regulatory environment is among the chief factors hindering the entrepreneurial activity in South Africa, there is no/little empirical evidence to support this contention. Therefore, this paper investigates the factors within the businesses regulatory environment and their impact in the process of starting new businesses in South Africa. For this purpose a triangulation that involved both quantitative and qualitative research methods was employed. The results of the investigation revealed that bureaucracy, corruption, policy credibility, policy compliances and labour restrictions are the chief factors within the business regulatory environment that affect the process of starting new businesses. Furthermore, the study also found a positive and significance correlation between bureaucracy and corruption. Therefore, the study recommends policies to curb bureaucracy and corruption, flexibility in labour regulations, favourable compliance procedures as well as a more stable and credible policy environment that reduce hurdles in the process of starting new businesses.

DOI: 10.5901/mjss.2014.v5n6p109