The Role of Globalization in Entrepreneurial Development and Unemployment: A Comparative Study of South Africa and the United Kingdom

Abstract

ABSTRACT This study examines how institutional conditions influence entrepreneurial activity in South Africa and the United Kingdom. It investigates how globalization fosters or constrains new business formation and the growth of established businesses. Using hierarchical regression analysis, the study analyzes panel data from 2001 to 2020 to assess the effects of globalization on early‐stage and established entrepreneurship and its impact on unemployment. The Sobel test is applied to determine whether entrepreneurial activity mediates the relationship between globalization and unemployment. The findings show that in the United Kingdom, globalization supports both early‐stage and established entrepreneurship, contributing to lower unemployment. In South Africa, however, globalization primarily benefits established businesses, while early‐stage entrepreneurial ventures face structural challenges such as limited access to finance and regulatory inefficiencies. These results highlight the importance of a strong entrepreneurial ecosystem in ensuring that globalization leads to broad‐based business growth and job creation. The study emphasizes the need for targeted policy interventions to improve institutional support, particularly in emerging economies, so that early‐stage businesses can integrate into global markets and contribute to sustainable economic development.