Business model innovation in construction supply chains in South African townships

Abstract

It is widely-accepted that to achieve sustainable economic development, South Africa needs to move towards sustained and efficient entrepreneurship. However, in informal settlements (townships), entrepreneurship is hindered by various constraints. This study set out to determine how resource and contextual constraints, a lack of supply chain efficiency, and discrepancies between the South African formal and informal sectors present challenges in a complex construction-industry supply chain. The study investigated the idea that business model innovation cannot take place under this complexity and cannot sustain township business development in the broader competitive landscape of South Africa. A business model canvas was developed using the findings of the study, to assist entrepreneurs in the industry going forward. During the qualitative explorative study, a case study methodology was used in order to capture the experiences of a purposive sample in the township construction supply chain. A sample of fifteen respondents was drawn across five cases, comprising suppliers, customers and business owners from several township communities in Gauteng, South Africa Conclusive findings of the study suggest that resource and contextual constraints, a lack of supply chain efficiency, as well as dependency between the South African formal and informal sectors prevent business model innovation and thus supply chain efficiency in the township construction supply chain. The research was limited by language barriers, researcher bias, and participant subjectivity; however, the research is valuable as it addresses a different view to entrepreneurial theory that already exists, provides a detailed analysis into business in a specific industry within a township construction supply chain, and offers entrepreneurs the opportunity to develop their business models more formally using a business model canvas as a conceptual model. This will help to ensure that successful and efficient business ventures in the township construction supply chain are in operation.