Abstract

MADUKU, Harris. On the business cycle and new business ventures: A panel analysis of selected Southern African Development Community countries. Acta Commer. [online]. 2019, vol.19, n.2, pp.1-14. ISSN 1684-1999.  http://dx.doi.org/10.4102/ac.v19i2.661.

ORIENTATION: This article investigates the relationship between entrepreneurial activities and the business cycle for selected countries in Southern African Development Community (SADC). RESEARCH PURPOSE: The purpose of the study was to understand how business cycle affects the supply of small businesses in the selected SADC countries. MOTIVATION OF THE STUDY: The regional block has been witnessing low economic growth patterns accompanied by high unemployment rates, poverty and inequality leading policymakers to start looking at small business supply as a possible solution. RESEARCH DESIGN, APPROACH AND METHOD: The article used panel data spanning from 2000 to 2016. It also used random and fixed-effects estimation techniques. MAIN FINDINGS: The study found a negative relationship between entrepreneurial activities and business cycle. Interestingly, our findings did not show either a bidirectional or unidirectional relationship between the variables of interest although they maintained an expected sign relationship as per a priori expectations. The findings also showed a negative relationship between inequality and new entrepreneurial activities and the variable is significant at the 1% level. PRACTICAL/MANAGERIAL IMPLICATIONS: The implications of this article are that governments in these selected SADC countries prioritise nurturing small businesses so that they can grow to significantly contribute to economic growth. CONTRIBUTION/VALUE-ADD: The contribution of this study is in finding the nature of the relationship that exists between the business cycle and supply of small businesses in selected SADC countries.

Keywords : entrepreneurship; new business density; business cycle; economic growth; fixed effects; random effects.

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