Modelling the Impact of Entrepreneurship in Urban Employment Growth of Mining Towns in a Developing Country

The purpose of the research paper was to establish linkages between declines in mining activities and levels of entrepreneurship in mine-towns. The paper studied the impact of entrepreneurship in creating economic and employment growth in areas where mining dominates economic activities. Previous literature on concepts that include: modern entrepreneurship, measures of entrepreneurship, urban employment growth, value capturing and value creations are used to construct a system dynamics model for mining value chain activities and the development of entrepreneurial independence.

This paper argues that entrepreneurship by small enterprises in mining may create value where large-scale companies capture the value from opportunities created by large capital project expenditures. A system dynamic model was developed using data collected through focus groups in the Northern Cape town of Kathu. The research approach is thus based on a system dynamics simulation of established principles of embeddedness and structuration theories to further analyse the causal relationship between entrepreneurship and employment growth in an urban area.

An argument is raised in the paper that there is a link between growth in entrepreneurship-led employment in mining and subsequent levels of economic activity in secondary and tertiary sector businesses. The paper concludes and concurs with previous authors that economic development is best achieved through activities of opportunity entrepreneurship and not through dominance of large enterprises.

The authors argue that, the points raised in this research may contribute to a dialogue in the South African mining environment where historical mines are nearing the end of their useful life with most of the towns facing potential decay due to lack of alternative industry and negative business migration. The findings of this research can be used by policy makers in determining future direction in mining and entrepreneurial development in South Africa, however, cannot be generalised to all geographies as some aspects of the outcome reflect the performance of thriving mining towns with uniquely South African policy dynamics.

This resource is part of the Mining Towns Collection kindly sponsored by the Municipal Capability and Partnership Programme. Abstract based on source.