African Small And Medium-sized Enterprises Research Articles

Challenges and opportunities in AI and digital transformation for SMEs: A cross-continental perspective

This study examines the impact of AI and digital transformation on Small and Medium-sized Enterprises (SMEs) across continents. As AI and digital technologies increasingly reshape global business landscapes, SMEs face unique challenges and opportunities distinct from those of larger corporations. This research systematically reviews existing literature, guided by the PRISMA framework, to identify the barriers and enablers of AI adoption in SMEs across these diverse regions. The study identifies key challenges, including limited financial resources, lack of skilled personnel, data security concerns, and organizational resistance to change. These barriers vary across continents; for instance, African SMEs often struggle with the high costs of AI implementation and lack of resources and expertise, while European SMEs face stringent regulatory challenges and a lack of infrastructure and finances. In contrast, Asian SMEs, particularly in developing countries, grapple with sustainability and sustainable regulatory and cultural barriers. However, it's important to note that the potential of AI to enhance operations and customer engagement is a universally recognized benefit. Europe emphasizes risk management and automation, while Africa and Asia highlight cost reduction, market expansion, and scalability, reflecting their unique regional priorities and challenges. The study concludes that while AI adoption presents considerable growth potential for SMEs globally, the path to realizing these opportunities is shaped by regional contexts. The research underscores the need for tailored policy interventions, capacity-building initiatives, and cross-border collaborations to support SMEs in overcoming these barriers and fully leveraging AI technologies. This work contributes to understanding digital transformation in SMEs, providing practical insights for policymakers, industry leaders, and academics interested in the intersection of AI and business strategy across different continents.

SME resilience: Critical financial planning success factors post-COVID-19

Small and medium-sized enterprises (SMEs) are crucial to South Africa’s economy as they provide employment, contribute to development, reduce poverty, and promote entrepreneurship. However, the COVID-19 pandemic has severely impacted SMEs in the country, posing a threat to their survival. The purpose of the study was to identify the financial planning critical success factors that are essential for SME performance in a post-COVID-19 pandemic environment. The study followed a positivist paradigm, and a quantitative survey approach was employed. South African SMEs across the various sectors of business were targeted to provide a holistic view of the financial planning strategies contributing to performance. A total of 282 questionnaires were completed electronically by the SME owners using Google Forms, which were then analyzed using SPSS and Smart PLS software. The regression model for structural equation modeling revealed a strong and significant link between financial planning and SME performance. Financial planning has a strong, significant positive effect on SME performance, as indicated by the path coefficient (β = 0.227, p = 0.002). The importance of this study lies in its ability to provide valuable insights to businesses regarding financial planning strategies to enhance SME success in a post-COVID-19 environment.

Сhallenges of Сooperation between Russian and African Small and Medium Enterprises in the Field of Innovation

In recent years, international cooperation in the development and implementation of innovations has been progressing rapidly. As a result, more and more innovative products and technologies are appearing on the market. An analysis of the criteria for small and medium-sized enterprises (SMEs) in Russia and African countries has revealed their heterogeneity and sometimes inconsistency, which requires the harmonization of these criteria at the level of national governments and international organizations. The study provides a number of practical recommendations for small and medium-sized enterprises engaged in external economic activities related to the development and implementation of innovations, as well as for Russian development institutions, venture funds and other organizations. The main problems and opportunities that Russian and African SMEs may face are identified in the paper, and the key areas of their potential cooperation are suggested. The main strategic goal of cooperation between Russian and African SMEs in the field of innovation is defined as the transition from “catching-up”, imitating kind of technical progress to “overtaking” innovative development.

THE DIGITAL TRANSFORMATION OF SMES: A COMPARATIVE REVIEW BETWEEN THE USA AND AFRICA

The digital transformation of Small and Medium-sized Enterprises (SMEs) is a critical phenomenon shaping the global business landscape. This paper presents a comparative review between the United States and Africa, exploring the diverse trajectories of digitalization within these regions. While the USA is often at the forefront of technological advancements, Africa's SMEs exhibit unique challenges and opportunities in their digital transformation journey. In the United States, SMEs have embraced digital technologies to enhance operational efficiency, improve customer experiences, and gain a competitive edge. The adoption of cloud computing, data analytics, and e-commerce platforms has become ubiquitous, fostering innovation and scalability. This comparative study delves into the specific strategies employed by American SMEs to navigate the complexities of the digital era. On the contrary, African SMEs face distinct hurdles in their digital transformation efforts. Infrastructure limitations, limited access to capital, and a diverse economic landscape present unique challenges. However, this review sheds light on the innovative approaches taken by African SMEs to overcome these barriers. Leveraging mobile technology, localized digital solutions, and collaborative networks, African SMEs are carving out their digital paths. Moreover, this comparative review emphasizes the role of government policies and support mechanisms in shaping the digital transformation landscape for SMEs in both regions. By examining regulatory frameworks, funding initiatives, and skill development programs, this paper provides a comprehensive analysis of the ecosystem supporting SMEs in their digital evolution. The digital transformation of SMEs is a dynamic process with distinct nuances in the USA and Africa. While American SMEs benefit from advanced technological infrastructures, African SMEs showcase resilience and adaptability in leveraging digital tools to overcome challenges. Understanding these diverse trajectories is essential for policymakers, businesses, and researchers seeking to foster inclusive and sustainable digital growth globally.
 Keywords: Digital Transformation, SMEs, USA, Africa, Review.

Effect of Knowledge Management Practices on Organizational Performance in African SMEs

Abstract
 Purpose: The aim of the study was to investigate Effect of Knowledge Management Practices on Organizational Performance in African SMEs
 Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.
 Findings: Knowledge Management (KM) practices have a positive impact on the performance of African Small and Medium-sized Enterprises (SMEs) by enhancing innovation, improving decision-making, and increasing customer satisfaction. However, challenges related to knowledge transfer and limited resources can hinder the full realization of KM benefits in these organizations. Cultivating a strong learning culture is crucial for continuous improvement. KM strategies must be adapted to the local context and cultural nuances of African countries to maximize their effectiveness.
 Unique Contribution to Theory, Practice and Policy: Resource-Based View (RBV) theory, social capital theory & dynamic capabilities theory may be used to anchor future studies on effect of knowledge management practices on organizational performance in African SMEs. SMEs in Africa should tailor their knowledge management practices to align with their unique organizational cultures, structures, and resource constraints. Governments in African countries should consider implementing policies that provide incentives, subsidies, or tax breaks to SMEs that adopt effective knowledge management practices.

Charity can still begin at home: Examining the drivers and boundary conditions of Africa-to-Africa outward foreign direct investment (OFDI)

Recent studies on ‘Africa Rising’ and ‘Africa-to-Africa Internationalization’ have propelled conversations on how African Small and Medium-Sized Enterprises (SMEs) can continue to internationalize within African countries. From the tenets of the institutional theory and the dynamic capabilities perspectives, this study proposes and tests a framework of how and when dysfunctional competition drives SMEs' outward foreign direct investments within African countries. Analysis of a survey data from 196 Ghanaian SMEs operating across the African continent indicates that cross-border open innovation mediates the relationship between dysfunctional competition and SMEs' intra- Africa OFDI activities. Further analysis revealed that SMEs' strategic agility plays a double-edged sword moderating role in enhancing the effects of dysfunctional competitions and cross-border open innovation on intra-Africa OFDI. These findings have significant implications for the international business and finance literature as well as the management and growth of African SMEs.

Promoting Circular Economy Model through SMEs’ Growth: A Focus on African Nations

Purpose- The purpose of this study is to investigate the pivotal role of Small and Medium-sized Enterprises (SMEs) in promoting circular economy principles within African countries. By examining the challenges, opportunities, and policy implications, this research aims to provide valuable insights into how SME development can be harnessed as a catalyst for sustainable and circular economic growth in the African context. Design/methodology/approach: Our methodology encompasses a comprehensive literature review and theoretical analysis to explore the relationship between Small and Medium-sized Enterprises (SMEs) and circular economy principles in African countries, providing a robust foundation for our study. Findings: The study's findings emphasize the significant potential of African SMEs in promoting circular economy practices. However, they also reveal the various challenges these SMEs encounter, including financial constraints and regulatory complexities. Successful initiatives and supportive policies demonstrate that with targeted interventions, SMEs can play a vital role in advancing sustainability in Africa. Research limitations/implications: The study primarily relies on theoretical analysis due to the absence of empirical data, potentially limiting the practical application of findings. Additionally, the diverse African context may require further country-specific research for precise policy recommendations. Social implications: The research carries significant social implications, as the adoption of circular economy practices by SMEs in African nations can lead to the creation of more sustainable and inclusive economic systems, positively impacting local communities and fostering social cohesion. Originality/value: The research contributes original insights by specifically focusing on the underexplored intersection of SMEs and the circular economy in the African context, providing a valuable foundation for future studies and policy initiatives aimed at fostering sustainability and economic development.

Deconstructing involuntary financial exclusion: a focus on African SMEs

Small and medium-sized enterprises (SMEs) struggle to obtain credit when credit ratings and collateral are used as criteria to assess their credit applications. In the context of Africa, the financial markets have gaping institutional voids, and contextual insights into SMEs’ experiences remain underdeveloped. Drawing on the stakeholder-agency theory of debt financing, this paper advances the scholarly conversation by theorising about how collateral security, collateral security value and the gender of SME owners lead to the involuntary financial exclusion of many manufacturing businesses in Africa. Analysis of the World Bank Enterprise Survey (WBES) dataset reveals that collateral security and collateral security value, together with gender biases in Africa’s financial markets, reduce credit access potential. Consequently, SMEs’ perceptions of the likelihood of obtaining credit for business purposes are reduced. Empirical results for 13,783 SMEs across 41 African countries indicate that the motivations to apply for credit also diminish. These observations contribute to entrepreneurial financing and SME research.

Industry 4.0 concepts within the sub–Saharan African SME manufacturing sector

In developing nations, small and medium-sized enterprises (SMEs) in the manufacturing sector do not or are slowly adopting industry 4.0 (I4.0) concepts, making them less competitive. Yet, they serve as the backbone of emerging economies, thus creating a performance gap between them and their international competitors. As a result, more efforts will be required to provide adequate tools for SMEs to implement I4.0, especially in emerging economies and Africa. This study tackles the disconnect in sub–Saharan African manufacturing SMEs through an empirical research approach using the focus group discussion method, which is the first to collect opinions, reinforcing the current literature on I4.0 technologies, prospects, and challenges to implementation. Our findings underpin six critical drawbacks for implementing I4.0 by manufacturing SMEs in emerging economies and proffer mitigation strategies to establish Sub-Saharan Africa as a competitive, innovation-driven manufacturing powerhouse at the centre of Industry 4.0 development and adoption.

Can A Small Business Enterprise Become A High Performance Organisation: A South-African Case Study

It is generally accepted that small and medium sized enterprises (SMEs) have room for improvement from a high-performance perspective. However, research concerning the use of High-Performance Organisation (HPO) frameworks for South African SMEs is wanting. The purpose of this study is to explore the applicability of the scientifically validated de Waal HPO Framework for assessing SMEs in the South African context and thereby transforming such companies into HPOs. The study is exploratory by nature and therefore adopts a qualitative approach in the form of a case study. Case data was collected using in-depth personal interviews, which then was thematically analysed. The study showed that applying the HPO Framework is a valuable technique for evaluating the performance of an SME in the South African context. The framework yielded clear recommendations on the areas where the case company could use the HPO framework in order to get the company’s performance to a higher level.

International entrepreneurial behavior of internationalizing African SMEs – Towards a new research agenda

Research on the international entrepreneurial behavior of small and medium-sized enterprises (SMEs) originating from Africa has been receiving growing scholarly attention. Despite a proliferation of studies on the subject, the literature has hitherto remained fragmented, theoretically limited, and empirically inconclusive, thereby leaving important topics underexplored. This paper seeks to address this shortcoming through a systematic literature review aimed at critically analyzing and synthesizing 66 articles published in leading journals from 1995 to 2021. Our paper describes how research on the international entrepreneurial behavior of African SMEs has evolved over time, and identifies key gaps in the existing literature, thereby pointing at future avenues for research. By mapping descriptive findings in terms of methods, geography, and theoretical perspectives, we further develop an integrative framework suited to frame insights drawn from the current literature and offer important opportunities for future research on internationalizing SMEs originating from Africa.

Modelling the antecedents for export orientation, innovation capacity and performance for South African manufacturing SMEs

Orientation: In order to improve performance, South African manufacturing small and medium-sized enterprises (SMEs) need to constantly look at expanding their markets by exploring export opportunities and innovating their products and services.Research purpose: The aim of this study was to model the antecedents for export orientation, innovation capacity and SME performance.Motivation for the study: Although the influence of export orientation and innovation capacity on firm performance is well established, this study has brought together these capabilities as well as SME absorptive capacity, knowledge management and entrepreneurial competence into one model.Research design, approach and method: The study adopted a quantitative research approach and employed a cross-sectional survey of 207 SMEs in South Africa. Structural equation modelling was employed for data analysis using AMOS 26.0.Main findings: Absorptive capacity and knowledge management capabilities are certainly significant capabilities that should be embedded in the SME business, in view of their role in positively influencing the development of export orientation and innovation capacity, and that the influence of entrepreneurial competence is not significant enough. The results of the study showed that the primary data collected and analysed fit the posited model.Practical/managerial implications: With SMEs seeking to enter the export market faced with a number of challenges as they begin to explore unchartered waters, the ability to learn and assimilate new knowledge will stand SMEs in good stead as they expand their markets beyond the present boundaries.Contribution/value-add: The study’s findings extend the principle of distributed focus of attention into a possible new theory called SME Export and Innovation Attention Theory.

Determinants of innovation and its impact on financial performance in South African family and non-family small and medium-sized enterprises

Background: The importance of innovation for enterprises of all sizes is well documented. However, existing research is ambiguous, with several research gaps concerning the role and nature of innovation in the performance of family and non-family small and medium-sized enterprises (SMEs), particularly in a South African context. Aim: The aim of the study was to identify the determinants of innovation output, the types of innovation that are commonly being utilised and the influence thereof on perceived financial performance. Setting : A total of 224 responses from family and non-family SMEs in South Africa were analysed in the study. Methods: The statistical analysis included assessing the validity and reliability of the measuring instrument by using an exploratory factor analysis and Cronbach’s alpha coefficients, respectively. Inferential statistics included calculating the Pearson’s product moment correlations, a t -test, analysis of variance tests and multiple regression analyses. Results: Predictors or determinants of Innovation output amongst family and non-family SMEs in this study are Innovation-orientated organisational culture, Market orientation and response and Risk-orientated entrepreneurial orientation . A significant and positive relationship was also found between Innovation output (which included product, process, organisational and marketing innovation) and Perceived financial performance . No differences were found concerning the innovation practices of family and non-family SMEs in this study. Conclusion: Innovation plays an important role in improving the financial performance of SMEs. In addition, financial and human resources are not necessarily the main determinants of innovation in South African SMEs, but rather the creation of an innovation- and market-orientated organisational culture, together with a risk-orientated entrepreneurial orientation.

Antecedents of mobile marketing adoption by SMEs:Does industry variance matter?

ABSTRACT Although innovations such as mobile marketing offer targeting and a cost-effective approach to marketing that could be leveraged by small and medium-sized enterprises (SMEs), most SMEs have shown a noticeable skepticism toward adopting the innovation. To overcome this adoption inertia, more research is necessary. This study draws on an integrated framework with theoretical considerations from the technology–organization–environment (TOE) framework to examine how factors in the technology context (relative advantage, complexity, and compatibility), the organizational context (top management support, financial resource slack, and employee mobile marketing capability) and the environmental context (mobile marketing vendor support, competitive pressure, and customer pressure) predict marketing adoption behavior by South African SMEs. Using a comparative analysis, the study further ascertains whether industry variance moderates the factors predicting mobile marketing adoption behavior between manufacturing and tourism-sector SMEs. Data for the empirical testing of the integrated framework were randomly sourced from 201 SMEs in the manufacturing and tourism sectors. The results show that relative advantage, complexity, top management support, competitive pressure, and vendor support are key drivers of mobile marketing adoption in the overall sample of manufacturing and tourism sector SMEs in South Africa. However, the results not only show different set predictors of mobile marketing adoption between the manufacturing and tourism sector SMEs: they also emphasize that the relative importance of the salient determinants of the innovation’s adoption varies across the industries, suggesting that industry variance plays a significant moderating role in mobile marketing adoption decisions across the two SME sectors that are examined. The implications of the findings for researchers and practitioners interested in promoting a more favorably disposed adoption of mobile marketing at the SME interface are discussed.

The Belt and Road Initiative and East African small and medium-sized enterprises: benefits, drivers and particular sectors

PurposeDrawing upon the institutional theory, the present study investigated whether or not small and medium-sized enterprises (SMEs) in East Africa benefit from the Belt and Road Initiative (BRI), and how the latter influences the internationalization of the former.Design/methodology/approachAn in-depth interview was conducted by using 26 SME managers/owners who are engaged in international activities in the “Belt and Road” countries. The sample was chosen from four East African countries across three industries. The theoretical framework emerged from the grounded theory analysis of the primary data.FindingsThe authors found that the BRI as a formal institutional force generates both direct and indirect influences on SMEs' internationalization. Three key driving forces, namely partnerships, specialized services and innovativeness underpin the internationalization of SMEs. Additionally, sectoral analysis of the similarities and differences in responses reveals no remarkable differences in the drivers and impact of the BRI on SMEs in all the three industries investigated.Research limitations/implicationsThe internationalization process of East African SMEs could be augmented through formal institutions like the BRI, and the internationalization of SMEs along the “Belt and Road” countries mimic an integrative approach. The theoretical framework demonstrates significant potential for further benefits that SMEs may obtain through the BRI by taking advantage of certain BRI opportunities and adopting crucial strategies to internationalize rapidly.Originality/valueThis is the first study to employ a qualitative approach to study the influence of the BRI at the firm-level. Specifically, the paper covered the hub of BRI countries in East Africa. Hence, the study makes substantial theoretical and policy contributions to the literature.

Internationalization processes for sub‐Saharan Africa's small and medium‐sized enterprises: The case of Ivory Coast

AbstractThe aim of this research is to characterize the main internationalization paths of African small and medium‐sized enterprises (SMEs) particularly Ivorian ones. From our results analysis, it appears that the internationalization strategies of African SMEs are specific and adapted to their environments and characteristics. For example, it is important that Ivorian SMEs' managers take into account the national culture and the characteristics of the host market (situation of significant need, market saturation, protectionism) during their international approaches. In addition, we find out that most Ivorian SMEs adopt upstream (import) and downstream (export) internationalization with import as the first mode of entry into foreign markets. Finally, we observe that it is essential that African governments recognize the potential of international SMEs for economic development by introducing support programs. Otherwise, African SMEs would not be able to compete globally and grow.

Testing the self-selection theory in high corruption environments: evidence from African SMEs

PurposeWhilst substantial evidence from low-corruption, developed market environments supports the view that more productive firms are more likely to export, there has been little research into analysing the link between productivity and exports in high corruption, developing market environments. The purpose of this paper is twofold. First, to test the premise of self-selection theory whether the association between productivity and export is maintained in high-corruption environments, and second to identify other variables explaining export activity in high-corruption contexts, including cluster networks and firms’ competences.Design/methodology/approachThe authors draw on the World Bank Enterprise survey to undertake a cross-section analysis including 1,233 small- and medium-sized enterprises (SMEs) located in nine African countries. The advantage of this database is that it contains information about the level of perceived corruption at firm level. Logistic regressions are performed for the full sample and for subsamples of firms in high- and low-corruption environments.FindingsThe findings demonstrate that the self-selection theory only applies to low-corruption environments, whereas in high-corruption environments, alternative factors such as cluster networks and outward-looking competences (OLC) exert a stronger influence on the exporting activity of African SMEs.Research limitations/implicationsThis research contributes to the theory as it provides evidence that contradicts the validity of self-selection theory in high-corruption environments. The findings would benefit from further longitudinal investigation.Practical implicationsAfrican SMEs need to consider cluster networks and OLC as important strategic factors that might enhance their international competitiveness.Originality/valueThe criticism of the self-selection theory is distinctive in the literature and has important implications for future research. The authors show that the contextualisation of existing theories matters and this opens a research avenue for further more sensitive contextualisation of existing theories in developing economies.

Lean and agile in small- and medium-sized enterprises: Complementary or incompatible?

Background: This study explores the relationship between the implementation of lean supply chain management and the agility of manufacturing small- and medium-sized enterprises (SMEs). Although some studies have suggested that these two approaches are mutually exclusive, other research finds that they may be applied to different parts of the supply chain or may be compatible through the common elements of process integration and supply chain-wide collaboration. Objectives: Through an investigation of two companies at different stages of lean implementation, this study sought to establish which of these paradigms might be applicable in the context of South African SMEs. Method: Semi-structured interviews were conducted with managers at both companies, and the progress towards lean manufacturing was probed. Results: Company B was found to have made considerably more progress towards a lean system than Company A. Neither company had achieved just-in-time purchasing, and this was identified as a challenging aspect for SMEs. Both companies experienced stockouts and long lead times. The volatile nature of their markets indicated a need for greater agility. Company B was found to have a greater potential for speed, flexibility and response. It is proposed that this may be a direct consequence of greater progress in lean implementation. Conclusion: It was concluded that strategies to implement lean are a necessary prelude to achieving an agile enterprise. This article presents a model incorporating the lean principles that SMEs should adopt in order to achieve agility.

How do African SMEs respond to climate risks? Evidence from Kenya and Senegal

This paper investigates to what extent and how micro, small and medium-sized enterprises (SMEs) in developing countries are adapting to climate risks. We use a questionnaire survey to collect data from 325 SMEs in the semi-arid regions of Kenya and Senegal and analyze this information to estimate the quality of current adaptation measures, distinguishing between sustainable and unsustainable adaptation. We then study the link between these current adaptation practices and adaptation planning for future climate change. We find that financial barriers are a key reason why firms resort to unsustainable adaptation, while general business support, access to information technology and adaptation assistance encourages sustainable adaptation responses. Engaging in adaptation today also increases the likelihood that a firm is preparing for future climate change. The finding lends support to the strategy of many development agencies who use adaptation to current climate variability as a way of building resilience to future climate change. There is a clear role for public policy in facilitating good adaptation. The ability of firms to respond to climate risks depends in no small measure on factors such as business environment that can be shaped through policy intervention.

Internal and external determinants of export performance: Insights from Algeria

The internationalization of small and medium‐sized enterprises (SMEs) has been the focus of numerous studies. However, while the attention has thus far been on SMEs operating in developed countries, firms evolving in a developing context, including Africa, have been largely neglected. To address this, and drawing on a dual resources‐based and network‐based view, this study simultaneously investigates the importance of internal and external resources for firms’ export performance and regularity in the context of North African SMEs. Using a sample of Algerian exporters, the study reveals the superiority of discrete resources for boosting export performance and export regularity. These findings provide directions to Algerian SME managers and policymakers as to important factors driving the internationalization process in the developing Algerian context.