The barriers to green entrepreneurship in developing countries

Abstract

This study set out to investigate the barriers impeding the emergence and proliferation of green small and medium enterprises (SMEs) in South Africa. Despite much interest in the potential contribution of SMEs through exploiting emergent green entrepreneurship opportunities, local investors have not been as active in the green space. While the barriers to green entrepreneurship have been investigated in developed country contexts; as well as in transition economy contexts; very little is understood about what factors impede green entrepreneurs in developing country contexts. The challenges perceived by South African green entrepreneurs in terms of access to finance; government support programs and policies; as well as market demand for green products and services were explored. A qualitative exploratory study was performed to gather new insights into the barriers impeding green entrepreneurs. Semi-structured in-depth interviews were conducted with 10 owner-managers of small green entrepreneurship ventures. Audio recordings of the interviews conducted with respondents were made and transcribed utilising coding and thematic analysis. The key findings of the study were that that green SMEs face significant challenges in terms of access to finance and access to adequate government support. Challenges in terms of access to finance pertained to the accessing capital, high interest costs, collateral; and loan tenors. Challenges pertaining to the government were access to well-designed policies and programs; officials with poor knowledge about green technologies; and corruption in government departments and agencies. Parallels were drawn between the extant literature and the key findings; however, it was determined that there still are additional dimensions to the barriers to green entrepreneurship in developing countries that are yet to be fully explored in the literature.