26th International Association for Management of Technology Conference - IAMOT 2017

The impact of the information technology (IT) sector in the creation of entrepreneurial ventures has been demonstrated for various countries. Entrepreneurship is a key ingredient to underpin economic growth for developing countries. There is limited research on technology entrepreneurship, particularly with regard to the challenges IT entrepreneurs encounter in South Africa. This study examined the challenges IT-based firms in an incubator in the Durban region face. Business incubation is a dynamic process of business enterprise development that nurtures young firms, and helps them to survive and grow during the start-up period when they are most vulnerable. Incubators, furthermore, provide hands-on management assistance, access to financing and orchestrated exposure to critical business or technical support services. A qualitative study was conducted on information technology (IT) small, medium and micro enterprises (SMMEs) in the Durban area, South Africa. Through case studies, an exploratory, theory-testing and theory-building approach was used. The sample was purposely selected from a stratified population of 47 and included eight participants who have been in an incubator for five years or less. Thematic and content analysis was applied to analyse the data with NVivo software. A shortage of start-up finances to set up the business does not appear to be a major stumbling block for IT SMMEs. This study indicated that owners of IT SMMEs do not necessarily need more start-up capital. It appears that most of the finance can be raised through successful initial business deals. Therefore, the ability to initiate, chase and close deals was reported to be very pertinent. The need for finance appears at a later stage when it is needed for business expansion and growth. The IT SMMEs have a most urgent need for skilled workers and equipment. However, it seems that there is further emphasis on the need for advanced IT and marketing skills. Another serious challenge that IT entrepreneurs face is ‘social engineering’, a phenomenon that occurs when a person privy to confidential information shares it with, for example, a family member or a friend. Challenges that could be problematic in future appear to be the availability of IT technicians, the funding of employee training programmes and security difficulties in cloud computing.