DECLARATION 1: PLAGIARISM
2.11 Theoretical Framework
supporting employment creation or growth. The present BEE model remains excessively focused on transactions that involve existing assets and which benefit a relatively small number of individuals. The following shortcomings have emerged in the implementation of BEE: First, ownership and senior management issues receive disproportionate emphasis. The unintended consequences of this trend include ‘fronting’, speculation and tender abuse. Secondly, the regulations do not adequately incentivise employment creation, support for small enterprises and local procurement”. The preferential tenets of the legislation however compound the situation by preferring ownership over local production and gives little priority to public institutions as suppliers.
2.10.9 Stakeholders’ involvement
Public procurement malpractices could be limited to some methods and processes. Firstly, there might be the need to include stakeholders such as the civil society to be part of the procurement process, to perform oversight function. Secondly, stakeholders also need to be part of the current system where there are three bid committees. This is to limit instances of unethical practices. This will also improve good governance where the whole public procurement process will be opened to public scrutiny. Besides fostering good governance, the open recess will also help in creating a better relationship between the entities and the stakeholders die to the increased legitimacy and accountability. Lastly, an open public procurement process will reduce fraud and corruption, foster better accountability and generally limit the wastage of public resources and generally contributes towards a better service delivery.
2.11.1 Resource-based entrepreneurship theories
The resource-based entrepreneurship theories is credited to scholars such as Alvarez &
Busenitz (2001), Barney (1991), Rumelt (1984) and Wernerfelt (1984). The proponents of the resource-based entrepreneurship theories believe that access to resources by SMMEs owners or entrepreneurs is an important predictor of opportunity based entrepreneurship and new venture growth (Alvarez & Busenitz, 2001). Aldrich (1999) argues that the resource-based entrepreneurship theories stress the importance of financial, social and human resources in entrepreneurship business. Davidson and Honing (2003) also point out that access to resources enhances’ the owners ability to identify and act upon discovered opportunities. There are three theories which fall under the resource-based entrepreneurship theories, namely: financial, social and human capital (cidb, 2003).
Financial capital theory: Research show that starting-up a new firm requires access to finance (Blanchflower, Oswald & Stutzer, 2001; Evans & Jovanovic, 1989; Holtz- Eakin, Joulfaian & Rosen, 1994). Clausen (2006) postulates that the financial capital theory assumes that those entrepreneurs or SMMEs owners with financial capital are more able to acquire resources to effectively exploit entrepreneurial opportunities, and set up new firms. Contrary to the views expressed by the above scholars, other researchers (Aldrich & Keister, 2003; Davidson & Honing, 2003; Kim, Hurst &
Lusardi, 2004) content the financial capital theory on the ground that most entrepreneurs start new ventures without much capital, and that financial capital is not significantly related to the probability of being nascent entrepreneurs. The contradiction among the scholars is due to the fact that the studies that are linked to the theory of liquidity constraints generally aims to resolve whether an entrepreneur’s access to capital is determined by the amount of capital employed to start a new venture (Clausen, 2006). In spite of the contradiction in research findings, this does not not necessarily rule out the possibility of starting a firm without much capital. Hurst and Lusardi (2004) contend that owners access to finance is an important predictor of new venture growth but not necessarily important for the founding of a new venture.
Social capital or social network theory: A study reveals that entrepreneurs are embedded of a larger social network structure that constitutes a significant proportion of their opportunity structure (Clausen, 2006). Shane and Eckhardt (2003) suggest that an entrepreneur might possess the ability to identify entrepreneurial opportunities that
are available, yet might not have the social connections to transform the opportunity into a business start-up. It is suggested that access to a larger social network can assists overcome entrepreneurs to overcome this problem (cidb, 2003). Aldrich and Zimmers (1986) in their study also argue that the social capital theory shows that the stronger social ties to resource providers ensure the effective and efficient acquisition of resources and enhance the probability of opportunity exploitation. Other researchers (Aldrich & Cliff, 2003; Kim, Aldrich & Keister, 2003) also recommend that it is important for emerging entrepreneurs to have access to the well-established entrepreneurs in their social network, as the competencies possessed by these people represent a kind of cultural capital that the emerging entrepreneurs can draw upon in order to identify business opportunities.
Human capital entrepreneurship theory: Becker (1975) points out that there are two important factors which underline the human capital entrepreneurship theory, namely:
education and experience. A number of studies (Anderson & Miller, 2003; Shane &
Venkataraman, 2000; Chandler & Hanks, 1998) acknowledge that the knowledge acquired through education and experience represents a most useful resource that is heterogeneously distributed across many individuals and in effect central to understanding differences in opportunity identification and exploitation. Other studies (Anderson & Miller, 2003; Davidson & Honing, 2003; Kim et al., 2003) reveal that education and experience are positively related to becoming a nascent entrepreneur, increase opportunity recognition and entrepreneurial success.
There are a number of reasons why the study adopts the rsource-based entrepreneurship theories. Research show that access to resources such as finance, managerial skills, infrastructure, and technologies and information are the key challenges facing SMMEs sector worldwide (Ibrahim & Shariff, 2016; Mago & Toro, 2013; Green, Jones & Miles, 2012).
Therefore, an important justification for adopting this theory is that when properly adopted by emerging SMMEs in the construction industry it will enable them to get access to resources required to growth their businesses. Furthermore, the researcher observes that the theory does not only focus on access to finance but rather it recognises social networks, and human attributes (knowledge, experience, and competencies) required for a successful business venture. Hence, the theory when adopted will enable the emerging SMMEs owners to be
connected to well establish entrepreneurs who possess competencies to provide some form of mentorship, coaching and training for the emerging contractors.