An evaluation of support institutions in enhancing the commercialisation process
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Date
15-Jul
Authors
Booysen, Karen
Journal Title
Journal ISSN
Volume Title
Publisher
University of the Free State
Abstract
Afrikaans: Hierdie navorsingstudie het ‘n tweeledige doel waar dit eerstens gedien het om die
befondsingsproses van entrepreneuriese ondersteuningsinstellings te evalueer ten einde die
hindernisse tot kommersialisering te identifiseer. Tweedens, met hierdie hindernisse
ingedagte, argumenteer hierdie studie vir ‘n nuut-geformuleerde fase-georiënteerde proses
wat baseer is op drie onderskeidelike, tog komplimentêre fases, naamlik Haalbaarheid,
Lewensvatbaarheid en Volhoubaarheid. Hierdie fase-georiënteerde proses word aanbeveel
ten einde die ondersteuningsinstellings te lei in hul evaluering van aansoeke vir befondsing
en sodoende hulle in staat stel om waarlik die entrepreneurs en ondernemings-idees met
meriete te identifiseer. Addisioneel sal hierdie fase-georienteerde proses die entrepreneurs
in staat stel om die aansoekproses suksesvol te voltooi deur ‘n hanteerbare, verstaanbare
proses wat konstant gemonitor word. Sodoende sal tydige veranderinge moontlik wees en
dit die uiteindelike suksesvolle vestiging van ‘n onderneming meebring waarna die
entrepreneurs in staat gestel is om hul ondernemings, asook die industrie waarin hul gaan
meeding, te verstaan.
English: This research study was necessitated by the fact that entrepreneurs and the products and services they successfully commercialise are vital to the economy of any country, but given the high official unemployment rate of South Africa (SA) the need for entrepreneurship has been promulgated. Yet despite the importance of entrepreneurship, the rate of new venture start-up in SA remains alarmingly low. In order to address this issue the Government of SA has established several support institutions in order to aid and foster the establishment of entrepreneurs in SA. However, regardless of the vast investment of these institutions, the entrepreneurial start-up rate in SA remains low. Even more worrisome is the fact that the majority of early-stage entrepreneurs do not manage to progress to an established business. Moreover, the amount of entrepreneurs who manage to successfully obtain funding from these support institutions is equally low. All of the support institutions require a business plan from the applicants even though the literature on the effectiveness of business plans is still inconclusive. This is due to the fact that business plans are acknowledged as effective internal planning tools, but majorly criticised for being expensive, the involved nature of the plan and the fact that it is based on estimations of entrepreneurs rather that factual information. This highlights an important misconception in the current literature that a business plan is the best way to validate an entrepreneurial opportunity. The researcher therefore argues for a more structured, chronological, well defined, phaseoriented process through which to guide entrepreneurs, stage by stage, to a properly structured and solid business plan that is built on facts and expertise. This phase-oriented process would consist of three phases; feasibility, viability and sustainability. Although the argument of determining the feasibility, viability or sustainability of a new venture is not a new concept, there is a major gap in the current literature regarding the inconsistency with which these three terms are defined and the fact that these aspects are not integrated as complimentary phases, but rather viewed as studies to be conducted in isolation and that entrepreneurs need to conduct only one of these studies as opposed to all three, at different stages of venture formation. Upon completion of this advocated process the entrepreneur will truly understand the business, the industry in which this business will operate as well as the strategy that must be implemented in future in order to make a success of the venture, thereby obtaining all the benefits of entrepreneurship – for both the entrepreneur and society as a whole. In order to achieve the objectives as stated in chapter 1 of this study, a mixed methods, exploratory-sequential (where qualitative research is conducted initially and results obtained here become the major focus of the study where-after a quantitative phase is implemented in order to validate or explain the phenomena observed during the qualitative research phase) will be implemented. The study at hand was divided into three phases; namely, a qualitative phase (where interviews were conducted with the individuals who are responsible for evaluating the business plan applications received at the three government support institutions that were included in this study); a quantitative phase (during which questionnaires were sent out to entrepreneurs who have successfully established entrepreneurial ventures that are operational for a maximum of five years) and lastly an additional qualitative phase was included in this study (this phase consisted of conducting focus groups with individuals who applied for funding or support at the identified support institutions). The significance of the findings is that the barriers to new venture establishment were identified from three different perspectives; that of the support institutions, entrepreneurs who had established new ventures (whether they had any involvement with support institutions or not) and entrepreneurs who had applied for funding at the various government support institutions (whether they were successful in their application or not). With the results obtained it provided the author of this thesis with a thorough understanding of all the major barriers associated with the establishment of an entrepreneurial venture from a variety of perspectives. Consequently the merit of the suggested phase-oriented process can be argued from the in-depth theoretical analysis based on an investigation into the effectiveness of business plans and the aspects included in a typical business plan as well as the factors that influence successful commercialisation. Moreover, the results obtained from the data analysis equipped the researcher with a thorough, multi-perspective, practical insight into the barriers of the current commercialisation process, and through addressing these issues with the phase-oriented process; the merits of this newly constructed method are once again highlighted. The conclusion of this study is that the debate over whether or not business plans are useful tools in venture establishment can finally be laid to rest; a business plan is a useful internal planning and monitoring tool for established ventures, but not the best way in which to guide a novice entrepreneur from the idea to commercialisation phase. Typically, entrepreneurs already have technical skills and with the implementation of the feasibility, viability and sustainability process it will reduce the time and costs associated with founding an entrepreneurial venture. Through this suggested process the support institutions will be able to identify truly worthy entrepreneurs to assist and not base their funding decisions on a static business plan. Moreover, entrepreneurs who progress through this process will acquire the necessary skills and networks to build, and maintain a successful business. Thus the discrepancy between the high level of need for entrepreneurship in SA and the low rate of venture establishment and growth can be bridged. The main recommendation that follows upon the completion of this study is that the government support institutions, as well as entrepreneurs who do not seek the assistance of support institutions, should implement the suggested phase-oriented process in order to ensure that all the elements that have an impact on venture establishment are identified and addressed. An additional main recommendation of this study is that the government of South Africa must truly commit to creating an environment which will foster entrepreneurship by forming an alliance with the support institutions that implement this phase-oriented process. In doing so the typical costs and legal barriers encountered during the establishment of an entrepreneurial venture should be reduced, thus providing effective support to entrepreneurs.
English: This research study was necessitated by the fact that entrepreneurs and the products and services they successfully commercialise are vital to the economy of any country, but given the high official unemployment rate of South Africa (SA) the need for entrepreneurship has been promulgated. Yet despite the importance of entrepreneurship, the rate of new venture start-up in SA remains alarmingly low. In order to address this issue the Government of SA has established several support institutions in order to aid and foster the establishment of entrepreneurs in SA. However, regardless of the vast investment of these institutions, the entrepreneurial start-up rate in SA remains low. Even more worrisome is the fact that the majority of early-stage entrepreneurs do not manage to progress to an established business. Moreover, the amount of entrepreneurs who manage to successfully obtain funding from these support institutions is equally low. All of the support institutions require a business plan from the applicants even though the literature on the effectiveness of business plans is still inconclusive. This is due to the fact that business plans are acknowledged as effective internal planning tools, but majorly criticised for being expensive, the involved nature of the plan and the fact that it is based on estimations of entrepreneurs rather that factual information. This highlights an important misconception in the current literature that a business plan is the best way to validate an entrepreneurial opportunity. The researcher therefore argues for a more structured, chronological, well defined, phaseoriented process through which to guide entrepreneurs, stage by stage, to a properly structured and solid business plan that is built on facts and expertise. This phase-oriented process would consist of three phases; feasibility, viability and sustainability. Although the argument of determining the feasibility, viability or sustainability of a new venture is not a new concept, there is a major gap in the current literature regarding the inconsistency with which these three terms are defined and the fact that these aspects are not integrated as complimentary phases, but rather viewed as studies to be conducted in isolation and that entrepreneurs need to conduct only one of these studies as opposed to all three, at different stages of venture formation. Upon completion of this advocated process the entrepreneur will truly understand the business, the industry in which this business will operate as well as the strategy that must be implemented in future in order to make a success of the venture, thereby obtaining all the benefits of entrepreneurship – for both the entrepreneur and society as a whole. In order to achieve the objectives as stated in chapter 1 of this study, a mixed methods, exploratory-sequential (where qualitative research is conducted initially and results obtained here become the major focus of the study where-after a quantitative phase is implemented in order to validate or explain the phenomena observed during the qualitative research phase) will be implemented. The study at hand was divided into three phases; namely, a qualitative phase (where interviews were conducted with the individuals who are responsible for evaluating the business plan applications received at the three government support institutions that were included in this study); a quantitative phase (during which questionnaires were sent out to entrepreneurs who have successfully established entrepreneurial ventures that are operational for a maximum of five years) and lastly an additional qualitative phase was included in this study (this phase consisted of conducting focus groups with individuals who applied for funding or support at the identified support institutions). The significance of the findings is that the barriers to new venture establishment were identified from three different perspectives; that of the support institutions, entrepreneurs who had established new ventures (whether they had any involvement with support institutions or not) and entrepreneurs who had applied for funding at the various government support institutions (whether they were successful in their application or not). With the results obtained it provided the author of this thesis with a thorough understanding of all the major barriers associated with the establishment of an entrepreneurial venture from a variety of perspectives. Consequently the merit of the suggested phase-oriented process can be argued from the in-depth theoretical analysis based on an investigation into the effectiveness of business plans and the aspects included in a typical business plan as well as the factors that influence successful commercialisation. Moreover, the results obtained from the data analysis equipped the researcher with a thorough, multi-perspective, practical insight into the barriers of the current commercialisation process, and through addressing these issues with the phase-oriented process; the merits of this newly constructed method are once again highlighted. The conclusion of this study is that the debate over whether or not business plans are useful tools in venture establishment can finally be laid to rest; a business plan is a useful internal planning and monitoring tool for established ventures, but not the best way in which to guide a novice entrepreneur from the idea to commercialisation phase. Typically, entrepreneurs already have technical skills and with the implementation of the feasibility, viability and sustainability process it will reduce the time and costs associated with founding an entrepreneurial venture. Through this suggested process the support institutions will be able to identify truly worthy entrepreneurs to assist and not base their funding decisions on a static business plan. Moreover, entrepreneurs who progress through this process will acquire the necessary skills and networks to build, and maintain a successful business. Thus the discrepancy between the high level of need for entrepreneurship in SA and the low rate of venture establishment and growth can be bridged. The main recommendation that follows upon the completion of this study is that the government support institutions, as well as entrepreneurs who do not seek the assistance of support institutions, should implement the suggested phase-oriented process in order to ensure that all the elements that have an impact on venture establishment are identified and addressed. An additional main recommendation of this study is that the government of South Africa must truly commit to creating an environment which will foster entrepreneurship by forming an alliance with the support institutions that implement this phase-oriented process. In doing so the typical costs and legal barriers encountered during the establishment of an entrepreneurial venture should be reduced, thus providing effective support to entrepreneurs.
Description
Thesis (Ph.D.(Business Management))--University of the Free State, 2015
Keywords
Funding, Support institutions, Entrepreneurs