Regulating the `Animal Spirits' of Entrepreneurs?

Abstract

Despite a highly regulated economy under Apartheid, the espoused beliefs of South African entrepreneurs today are founded on Anglo-Saxon ideals of liberal markets and weak regulatory institutions.This belief system is confronted by an influential labour movement that initiated legislative reforms to transform labour market institutions towards a coordinated market economy model regulated by business, labour and the state. The country's skill development legislation aims to shift the low-wage, low-skill economy onto a growth path founded on the empowerment of workers into a skilled labour force by encouraging firms to increase their training expenditure. Case study evidence from food and beverages, manufacturing and services sectors suggests that SME approaches to training are not influenced by this legislation but by the requirements of the competitive business context, sector skill intensity and the entrepreneurs' business growth strategy. For SMEs the appropriateness of the new skill development framework to existing market conditions and institutional foundations is questioned.