Proportionality in enterprise development of South African towns

Abstract

We investigated proportionalities in the enterprise structures of 125 South African towns through examining four hypotheses, (1) the magnitude of enterprise development in a town is a function of the population size of the town; (2) the size of an enterprise assemblage of a town is a function of the town’s age; (3) there are statistically significant relationships, and hence proportionalities, between the total number of enterprises in towns and some, if not all, of the enterprise numbers of different business sectors in towns; and (4) the implications of proportionalities have far-reaching implications for rural development and job creation. All hypotheses were accepted on the basis of statistically significant (p < 0.05) correlations, except for the second hypothesis – the age of a town does not determine the size of its enterprise assemblage. Analysis for the fourth hypothesis suggested that there are two broad entrepreneurial types in South African towns: ‘run-of-the-mill’ entrepreneurs and ‘special’ entrepreneurs, which give rise to different enterprise development dynamics. ‘Run-of-the-mill’ enterprises are dependent on, and limited by, local demand and if there is only a small demand, the entrepreneurial space is small. By comparison, ‘special’ enterprises have much larger markets because their products and/or services are exportable. We propose that the fostering of ‘special’ entrepreneurs is an imperative for local economic development in South African towns.