Business Strategy
Institutionalizing Entrepreneurship: The Case of B-BBEE-Based Enterprise and Supplier Development in South Africa

Article Details
Pub. Date : March' 2020
Product Name : The IUP Journal of Business Strategy
Product Type : Article
Product Code : IJBS10320
Author Name : Domocia Zanele Sibiya, Brian Barnard
Availability : YES
Subject/Domain : Strategic Journals
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No. of Pages : 39

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Abstract

The purpose of the study is to examine the impact of Broad-Based Black Economic Empowerment Enterprise and Supplier Development (B-BBEE ESD) programs on Small Medium and Micro Enterprises (SMMEs) as a growth and development mechanism. B-BBEE ESD is South Africa's approach to correcting historical economic marginalization of black business. It incentivizes organizations that support and invest in the development of SMMEs. Empirical research on the value and contributions of B-BBEE ESD programs is scant and primarily focused on Black Economic Empowerment (BEE) as an overarching policy without narrowing it down to supplier development. Literature highlighted how data on SMME growth and the impact of BEE has been dismal, making it difficult to measure how much BEE has contributed to SMME growth. The study was conducted by interviewing 10 ESD beneficiaries and obtaining views on their participation experiences. The study employed qualitative technique as a research methodology and inductive approach since little is known on the research subject. The study also made use of thematic analysis to systematically analyze the data. The results indicate that ESD programs do benefit SMMEs in both financial and non-financial means. However, participants generally felt benefits were limited and more value could be extracted from partnerships. Moreover, the results indicate that the extent to which partnerships benefit either party is dependent on both organization's commitment and philosophical views on the imperatives of B-BBEE. Finally, the lack of monitoring and evaluation is a key contributor to the lack of data on the impact of implemented programs.


Description

The Broad-Based Black Economic Empowerment (B-BBEE) Act 53 of 2003 sets out to correct past injustices of racial and economic segregation against historically disadvantaged individuals (Republic of South Africa, 2003). A prominent emphasis thereof is the creation of economic opportunities for black entrepreneurs who were historically sidelined from participating in the country's economic activity (Tangri and Southall, 2008). B-BBEE incorporates Enterprise and Supplier Development (ESD) as a development tool to facilitate economic participation of black entrepreneurs; furthermore, it incentivizes Buying Organizations (BO) who support the transformation agenda (Pooe, 2016). Reception of Black Economic Empowerment (BEE) has been mixed, with numerous criticisms in relation to its slow pace and narrow focus (Patel and Graham, 2012). B-BBBE ESD is no exception, and it equally faces a number of challenges resulting in unintended consequences during implementation (Mashugane, 2018).


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