A composite index for the measurement of basic entrepreneurial skills in emerging enterprises

Abstract

The principal aim of the research work in this paper was to construct a composite index that could be used for the measurement of basic entrepreneurial competence in emerging enterprises operating in South African townships in Gauteng Province, South Africa. The research was based on a sample of 432 small, micro and medium-sized enterprises (SMMEs) that operate in Gauteng Province. In each business enterprise, entrepreneurial competence was measured by using a composite index consisting of 5 dimensions. These 5 dimensions are talent for creativity (measured by using 3 items), willingness to take reasonable risk (measured by using 12 items), efficiency in responding to business opportunities (measured by using 15 items), business leadership quality (measured by using 18 items), and efficiency in taking advantage of programmes of assistance that are offered to emerging SMMEs by the South African Government (measured by using 11 items). The scales used for measuring entrepreneurial skills were adapted from similar work done by Worku (2018:295-308) in the textile industry of Tshwane, South Africa. The results showed that about 70% of participants had satisfactory entrepreneurial skills, whereas the remaining 30% of participants did not. Regression coefficients and goodness-of-fit statistics obtained from structural equations modelling(Muller and Hancock, 2019) showed that the level of entrepreneurial skills was significantly influenced by 3 factors. These 3 factors were ownership of business, long duration of business operation (6 years or longer) and the ability to use business intelligence methods to gather information about business decisions and activities carried out by rivals and competitors.