Entrepreneurship Policy, Enterprise Diversification and the Motivation Factor: The Case of Botswana

Abstract

The paper interrogates the link between entrepreneurship policy, motivation in business start-ups, growth and enterprise diversification. The link has received considerable attention in developed economies but only limited attention in developing economies. The aim of the study therefore, was to establish the extent of policy influence on motivation and growth, and SME diversification as a prelude to wider economic diversification. The paper is based on a nationwide survey of small and medium enterprises undertaken in Botswana. The study surveyed 226 enterprises covering ten economic sectors. Factor analysis was used to derive factors whose dimensions were assumed to have a close relationship with motivation to SME start-up and growth. The results indicate that policy pronouncements have not always had the push influence on SME start-up and enterprise diversification. Instead key policies such as the tender policy and preferential purchasing policy with clauses meant to assist SMEs have not had a trickle-down effect. Entrepreneurs considered the demands of local authorities an impediment to enterprise start-up and growth. The study, inter alia, recommends the communication of policy right down to the bottom of the entrepreneurial pyramid, as a way of encouraging SME start-up and growth. An intervention to make it mandatory for private financial institutions to lend to SMEs is also recommended.

Keywords: Botswana, entrepreneurship, policy, motivation, diversification, SMEs