Owners' Characteristics and the Financial Bootstrapping Strategies Used by Rural Small Businesses in South Africa
Keywords:
Owners’ characteristics, financial bootstrapping, small business, rural, South Africa
Abstract
The purpose of this study was to examine if there are significant differences in the financial bootstrapping strategies of rural small businesses on the basis of owners' demographic characteristics (level of education and gender). The research followed a quantitative research method with descriptive research design. A sample of 104 rural small businesses participated in the survey. Data was collected through the use of self-administered questionnaires in a survey. The participants in the study were rural small business owners in Fetakgomo Municipality located in the Limpopo Province of South Africa. The study utilised the convenience and snowball sampling techniques to select the study participants. Data analysis included descriptive statistics, factor analysis and the T-test. The Cronbach alpha was used to measure reliability. The results of the T-test showed significant differences between gender and level of education and the financial bootstrapping methods used by rural small businesses. Recommendations are made to improve the awareness of bootstrapping by small business owners.
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References
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Lam, W. (2010). Funding gap, what funding gap? Financial bootstrapping: supply, demand and creation of entrepreneurial finance. International Journal of Entrepreneurial Behaviour& Research, 16(4), 268295. Lekhanya, L. M. (2016). E-Commerce as an instrument of governing SMEs’ marketing strategy in an emerging economy. Risk Governance & Control: Financial Markets & Institutions, 6(4), 298-305. Mahadea, D. & Simson, R. (2010). The challenge of low employment economic growth in South Africa: 1994 2008. South African Journal of Economic and Management Sciences, 13(4), 391-406. Mahembe, E. (2011). Literature Review on Small and Medium Enterprises’ Access to Credit and Support in South Africa. [Online]. Available:www.ncr.org.za/. [Accessed on 29 July 2017]. Mateev, M. & Anastasov, Y. (2011). On the growth of micro, small and medium-sized firms in central and Eastern Europe: a dynamic panel analysis. Banking and Finance Review, 3(2), 81-104. Modigliani, F. & Miller, M. (1958). The cost of capital, corporation finance and the theory of investment. American Economic Review, 48(3), 261-295. Modigliani, F. & Miller, M. (1963). Corporate income taxes and the cost of capital: A correction. American Economic Review, 53(3), 433-444. Mugobo, V. & Ukpere, W. (2012). Rural entrepreneurship in the Western Cape: Challenges and opportunities. African Journal of Business Management, 6(3), 827-836. Myers, S. (1984). Capital structure puzzle. Journal of Finance, 39(3), 575-592. National Small Business Act. (1996). Definition of Small Businesses. [Online]. Available. www.smesurvey.co.za/research-current.htm. [Accessed on 1 May 2015]. Neeley, L. & Auken, H. (2009). The relationship between owner characteristics and use of bootstrap financing methods. Journal of Small Business & Entrepreneurship, 22(4), 399-412. Neeley. L. & Auken, H. (2010). Women and men entrepreneurs: different relationships to bootstrap finance. In United States Association for Small Business and Entrepreneurship. Conference Proceedings. United States Association for Small Business and Entrepreneurship. Padachi, K., Howorth, C. & Narasimhan, M. (2012). Working capital financing preferences: The case of Mauritian manufacturing small and medium-sized enterprises (SMEs). Asian Academy of Management Journal of Accounting and Finance, 8(1), 125-157. Pfeffer, J. & Salancik, G. (1978). The external control of organizations: A resource dependence perspective. New York: Harper & Row Pooe, R. & Mafini, C. (2012). Business development challenges in a rural District Municipality in South Africa: A case of FezileDabi District Municipalityâ€. The Southern African Journal of Entrepreneurship and Small Business Management, 5(1), 89-109. Pretorius, W. (2007). Bootstrap Financing Applied by South African Entrepreneurs. Unpublished Doctoral dissertation, University of Pretoria. Rauch, A. & Frese, M. (2007). Let's put the person back into entrepreneurship research: A meta-analysis on the relationship between business owners' personality traits, business creation, and success. European Journal of Work and Organizational Psychology, 16(4), 353-385. Schinck, A. & Sarkar, S. (2012). Financial Bootstrapping: a critical entrepreneurship skill. Centro de Estudos e Formação AvançadaemGestão e Economia da Universidade de Aveiro, 20, 1-24. Schofield, R. (2015). Relationship between Bootstrap Financing, Number of Employees, and Small Business Success. DBA. Thesis, Walden University. The South African Presidency. (2008). The impact of crime on small business in South Africa. [Online]. Available: http://www.info. gov.za/view/downloadfileaction? id85242 [Accessed on 01 March 2017]. Trading Economics. (2016). Rural Population in South Africaâ€. [Online]. Available: http://www.tradingeconomics.com/south-africa/rural-population-wb-data.html. [Accessed on 29 August 2017]. Tshabalala, N. (2014). Crime and Unemployment in South Africa; Revisiting an Established Causality. Evidence from the Kwazulu Natal Province. Mediterranean Journal of Social Sciences, 5(15), 519-528. Vanacker, T., Manigart, S., Meuleman, M. & Sels, L. (2011). The Impact of Financial Bootstrap Strategies on Value Added in New Ventures: A Longitudinal Studyâ€. [Online]Available:http://www.gsom.spbu.ru/files/upload/niim/seminar/sophie_manigart_bootstra p_strategies.pdf. [Accessed on 21 September 2017]. Wehinger, G. (2014). SMEs and the credit crunch. OECD Journal Financial Market Trends, 3(2), 115-148.
Published
2018-09-14
How to Cite
Nchabeleng, M., Fatoki, O., & Oni, O. (2018). Owners’ Characteristics and the Financial Bootstrapping Strategies Used by Rural Small Businesses in South Africa. Journal of Economics and Behavioral Studies, 10(4(J), 277-286. https://doi.org/10.22610/jebs.v10i4(J).2427
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Research Paper
Copyright (c) 2018 Maurice Nchabeleng, Olawale Fatoki, Olabanji Oni
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