SA's economy should be driven by goals of innovation, not adequacy

This compares with Sweden, the highest ranked country, with 13.5%; the lowest was Bangladesh with 0.09%. South Africa is also the lowest among its participating BRICS counterparts, with China having an EEA rate of 1.73%, Brazil and Russia each with a rate of 0.84% and 0.44% respectively.(India did not participate in the survey.)

"Intrapreneurship is important because it may be the path to a better standard of living for SA's poorest. If we are to raise the quality of life for average South Africans, the economy should be driven by goals of innovation, rather than by goals of adequacy," says GEM team leader Mike Herrington. "Established businesses have the greatest impact on employment, as well as generally offering better employee benefits and more job security than start-up businesses," he says. The latest research suggests that entrepreneurship among employees is a key way to achieve this.

Intrapreneurship encourages employees to develop ideas and innovations that benefit the companies they work for, whether it is process development or ideas for new products and services.

Direct negative correlation

The research shows that there is a direct negative correlation between an economy's EEA rate and its total early-stage entrepreneurial activity (TEA) rate - economies with high EEA rates have low TEA rates, and economies with low EEA rates have high TEA rates.

According to Herrington, this suggests that in innovation-driven economies, entrepreneurship within organisations replaces, to some extent, independent entrepreneurship as an alternative means for pursuing entrepreneurial opportunity. Innovation-driven economies have, historically, had low unemployment, which acts as a disincentive to independent entrepreneurial development.

Although South Africa's TEA rate has grown slightly, holding steady at 9.1% in 2011 compared to a statistically similar 8.9% in 2010. According to Herrington, this is not overly encouraging because since South Africa started participating in GEM in early 2000 it has had a TEA rate that has constantly been below the medium for the rest of the world.

"The low TEA rate is due to poor education, lower than average perception of capabilities and opportunities as well as a lack of well-managed small business support; it could also be influenced by a substantial social welfare system," says Herrington. "The low EEA rate could also be due to education in South Africa. While much of EEA seems to occur in top management, it is possible that South Africa's education system is not encouraging many of our managers to be entrepreneurial within their places of work."

Health and education are important

According to Herrington there are two requirements for developing a strong innovation capacity within an economy: health and education. Innovation-driven economies generally rank higher in the Global Competitive Index with respect to both health and education.

"Higher job levels offer more autonomy to employees and provide better opportunities to develop social networks, which are both conductive to entrepreneurial employee activity," he says. The GEM report shows that employees in South Africa with higher levels of education are more likely to be involved in entrepreneurial employee activity.

But, 14.3% of South Africa's population has only a primary education, and 40.7% has an incomplete secondary education - that means 55% of the people in the country do not have a matric qualification. South Africa ranks 131 out of 143 economies on the Global Competitive Index in terms of education. "The country's EEA and TEA levels are likely to remain low until improvements in the quality of education are made and higher levels of education are made accessible to more of the population," says Herrington.

Create a culture of creativity

National experts who were surveyed as part of the research believe that low levels of internal corporate support for entrepreneurial employee behaviour, top-down decision-making domination within organisations, negatively impact EEA. These experts believe that factors positively impacting on EEA rates are: external factors such as employee protection and an increased access to social security, and internal factors such as employer encouragement.

"Employers should consider creating a culture of inclusivity and creativity, and show strong encouragement for new ideas from all employees, as it may help to expose those who are inherently entrepreneurial and have the potential to add value to the organisations in which they work," says Herrington. "Creating value for the organisation creates value for the economy, and intrapreneurship is the way to achieve this."