Experience transcends ethnicity: how entrepreneurial learning offsets educational disadvantage in South Africa MSMEs

Purpose This study aims to examine how different forms of human capital (experience, education and business scope) shape enterprise performance among ethnically diverse South African entrepreneurs. While disadvantage theory predicts that structural inequality constrains entrepreneurial outcomes, this study investigates whether specific forms of human capital can offset these constraints. Design/methodology/approach A cross-sectional survey of 312 entrepreneurs in Cape Town, Durban and Johannesburg was conducted. Data were analysed using partial least squares structural equation modelling with bootstrapping at 5,000 resamples. Findings Education, experience, business scope and ethnicity shape enterprise performance. Crucially, entrepreneurial experience operates as an ethnically neutral performance driver, whereas formal education’s returns are mediated by ethnic classification. Experience emerges as the strongest predictor, operating independently of ethnic mediation and compensating for limited formal education. Research limitations/implications The cross-sectional design limits causal inference, and broad ethnic categories may obscure intra-group differences. Longitudinal designs and disaggregated ethnic classifications are recommended. Practical implications Policies building human capital, especially entrepreneurial experience and education, are more effective for improving performance than those based solely on ethnic classification. Mentorship, training and experiential learning can yield broad performance gains. Social implications Accumulated experience is a powerful resource unconstrained by ethnic boundaries, offering pathways to equitable enterprise development for historically disadvantaged entrepreneurs. Originality/value This paper refines disadvantage theory by demonstrating that not all human capital operates identically in stratified contexts. It shows that experiential learning can transcend ethnic boundaries, offering a compensatory mechanism for disadvantaged background.