Business In South Africa Research Articles

The changing landscape of the spaza retail outlet amongst black South Africans

The Spaza retail outlet is predominately found in South Africa’s black populated areas or townships. It also has a historical significance to it because, during the apartheid years, black people were not allowed to move freely by the white minority rule. This study is qualitative research where the author carried out an extensive literature review to look first, at the background, characteristics, challenges, and future directions that affect the Spaza micro businesses in South Africa. The research aims to first highlight the importance of micro-businesses. Second, to highlight the need for South Africa’s government initiatives to support small businesses for sustainable growth of the economy and to explore whether this support is far-reaching enough to protect the Spaza retail shops. The authors rely on Karl Marx's theory of class struggle as the theory informing the study. Some of the findings are: Spaza owners need to be more trained in business management, entrepreneurial skills, advertisement, social networking and marketing research, accounting and bookkeeping, technology, and innovation concerning promoting their businesses. The Spaza's annual revenue stream for the South Africa government currently stands at 5.2 % of the GDP.

MIND THE GAP – INCREASING COMPLIANCE – BURDEN AND REGULATORY MISALIGNMENT

Since the dawn of the new constitutional supremacy, untold pieces of legislation have been promulgated. This led to an increase in legal and regulatory measures which increased the compliance burden, compliance risk and cost of businesses in South Africa, particularly in the financial sector. The objective of this note is to provide a snapshot of the increasing compliance burden on the financial sector between 1996 and 2011. It further highlights the incidence of misalignment among different pieces of legislationwith possible negative effects, using the Consumer Protection Act (68 of 2008) and the insurance industry as a case study. The author examines the generally accepted goals of good regulation and argues for an appropriate regulatory-assessment model that may alleviate the problem of misalignment and so prevent regulatory arbitrage.

Unravelling the makings for entrepreneurial success: A case study of the Maponya business in South Africa

Background: The achievement of local entrepreneurial success in South Africa is projected to reduce widespread unemployment in the townships, enhance the general buying power and upraise the overall productivity and living standards of poor South Africans. However, most entrepreneurial ventures do not survive for long, and remarkably the number of self-established, privately owned and long-standing businesses amongst black South Africans is very few.Aim: To investigate the factors that have led to the success and longevity of the Maponya business case.Setting: This research focused on a privately owned, self-initiated black South African successful business, which has been in existence for at least six decades.Methods: A qualitative research approach of a descriptive and explanatory single case study design was utilised using data from a semi-structured interview guide. Thematic and content analysis were used in the data analysis process.Results and findings: It was found that the Maponya business case is a family-controlled type of business. The success and longevity of the Maponya business case are attributable to the closeness of members within the Maponya family or clan. Access to membership is well controlled and requires adherence to a set of values based on one another to prosper in business.Conclusion: The documented findings can serve as a template for understanding the operationalisation of management techniques and leadership principles for entrepreneurial success and longevity in business for black South Africans and illuminate business prowess for the Southern African region and the entire African continent.

Business Succession in Indian Family Businesses in South Africa

Family businesses play a pivotal role economically and socially in most countries. The study aimed to identify and understand the experiences of Indian family businesses in South Africa with regard to business succession. A quantitative research approach was used with data collected through Google forms online survey. Data was collected from sixty (60) business people from Indian-owned family businesses in South Africa. The study interrogated the following factors which have an influence on family business succession: business ownership influence in succession, business readiness for the exit of owner and succession, the role of the owner after exit from business and selection criteria of the right successor. Findings revealed that the majority of families (86.27%) said it is important to have a hundred percent or full ownership of the business and that a successor should be selected within the family from their bloodline. Findings also revealed that the majority of businesses (86.27%) were not fully ready for the exit of the owner or current leader of the business and that on the exit of the owner; a majority (90.2%) of businesses will prefer to have the owner playing an active advisory role in the business. It is recommended that family-owned businesses should plan for succession on time and draft a well-planned strategic succession plan for the business. It is also recommended that an objective criterion be used in selecting a successor who will take the business forward. Healthy business continuity should be the ultimate goal of succession and families should not sacrifice successful business continuity because of their, internal differences and conflict, culture, blood relations, gender or religion.

Migrants working for migrants: dependence and discourse in Chinese-owned small commercial businesses in South Africa

The nature of work and employment relations of small Chinese migrant businesses in South Africa remains largely under-researched, despite the significant growth of these businesses since the 2000s. Based on 90 interviews with Chinese business owners and their African workers, we found that, although employment relations were largely transactional and adversarial, they sometimes also incorporated symbiotic accommodations with third-country undocumented immigrant workers and pockets of de facto responsible autonomy. Material imbalances of power were notably alleviated through workers’ superior local language skills and cultural familiarity, enabling them to carve out space as intermediaries with customers and other local stakeholders to counter the power of employers. However, this autonomy is relatively small in scope, in large part due to the precarious nature of the employment and the workers’ immigration status.

The South African Experience: Litigating Remedies

AbstractMany transnational corporations (TNCs) that conducted business in South Africa during apartheid had deemed it profitable and desirable, despite the country’s systemic human rights violations against its majority black population. In the aftermath of the 1960 Sharpeville Massacre and 1976 student uprising, various United Nations and other international resolutions condemned TNCs for their incestuous relationship with apartheid South Africa and called for international sanctions against the regime. The demise of apartheid in 1994 brought about a new democratic, constitutional dispensation based on respect for human rights. However, attempts at holding TNCs liable for aiding and abetting the apartheid regime were fraught with obstacles and proved unsuccessful. Yet, the pursuit of strategic, class action litigation in areas as diverse as collusive conduct in bread manufacturing to occupational lung disease in South Africa’s goldmining industry have proven to be more successful in developing legal remedies against corporate harm. Areas impacted are extended legal standing under the common law, development of new causes of action and generous application of contingence fees arrangement.

Motivations and unique challenges of successful foreign-owned small and medium enterprises in South Africa

ABSTRACT The notions of foreign-owned small and medium enterprises (SMEs) have gained the attention of scholars in the SME literature due to the contributions that they make in both their home and host countries. Despite the growing attention on foreign-owned SMEs in the academic literature, there is limited literature exploring the motivations and unique challenges that these enterprises face in the various African contexts. This study, therefore, used the grounded theory approach on a sample of forty-two (42) owners of successful foreign-owned SMEs operating in South Africa to explore their motivations and unique challenges. Eight (8) categories of motivations and five (5) unique challenges for successful foreign-owned SMEs to start businesses in South Africa were identified. A grounded theory in this study shows the motivations for starting SMEs, dealing with unique challenges and success factors of foreign-owned SMEs. The study provides useful insights into the motivations of foreign-owned SMEs, as well as on how successful foreign-owned SMEs deal with unique challenges to succeed.

South African female entrepreneurs’ motivational factors: Differences between young and established businesses owners

Entrepreneurship has been pointed out as a contributing factor leading to increased job creation, sustained economic development and, ultimately, economic growth. However, many young businesses struggle to survive the first three years, subsequently jeopardising the full potential they may have in terms of contributing to the economy. The literature suggests that motivational factors may play a contributing role in business sustainability and that the reason people decide to start or remain in business might play a part in the survival of a business. The purpose of this study was to determine which motivational factors female entrepreneurs deem most important and whether these factors differ between young and more established entrepreneurs in the South African context. The study made use of primary data obtained through self-administered questionnaires. A convenience sampling technique was used, resulting in a final sample of 515 female owners of small to medium-sized business in South Africa. Various statistical techniques were employed to analyse the data including internal-consistency reliability, descriptive statistics, factor analysis and an independent sample t-test. Results indicated that one’s contribution to others and independence as motivational factors yielded the highest means, followed by self-fulfilment and having high status in the community. Furthermore, a statistically significant difference between entrepreneurs with less than three years of experience and those with more than three years of experience was only observed for motivation derived from self-fulfilment. In more established businesses, the entrepreneurs had greater motivation to focus on self-fulfilment aspects. The study showed that South African female entrepreneurs could be considered more socially motivated and less profit-driven, which is also supported by the literature to an extent.

Business Ethics And The Repayment Of Loans In Small Enterprises

The capacity of small business enterprises to pay back loan money to microfinance agencies is a key determinant of long-term profitability in microfinance agencies (Mayer, Caruso & Salovey, 2016). Ethiopian entrepreneurs who conduct business in South Africa rely heavily on start-up capital raised from social capital schemes (Haile, 2015). The purpose of research was to determine factors that affect the repayment of loan money obtained from social capital schemes. The study points out necessary and sufficient conditions for the repayment of loans. The research found that 84% of the migrant entrepreneurs managed to pay back their loans in time, whereas about 16% of them failed to do the same. By the standards of Mayer et al. (2016), about 71% of respondents had adequate emotional intelligence. By the standards of Sahoo and Lenka (2016), about 72% of migrant entrepreneurs possessed adequate entrepreneurial skills. One key finding of study was that the repayment of loan money to social capital schemes was dependent upon awareness about the relative importance of adhering to business ethics principals, emotional intelligence, and the profitability of businesses. The study shows that the prompt repayment of loan money to social capital schemes, the acknowledgement of business ethics principles, and the possession of adequate emotional intelligence are key attributes of profitable businesses.

Covid-19 and Local Business Responses: Evidence from South Africa’s most Tourism-Dependent Locality

In emerging tourism scholarship around COVID-19 one of the major clusters of research surrounds issues of adaptation. Tourism businesses are compelled to adapt to shifts in consumer demand as well as government regulatory changes. The objective in this paper is to investigate the responses and adaptations to the impacts of COVID-19 of tourism businesses in South Africa’s most tourism-dependent locality. The research reports on 20 qualitative interviews undertaken with a cross-section of tourism enterprises in Bela-Bela Local Municipality, Limpopo province, which is overwhelmingly oriented towards the market of domestic tourism. Major results are local businesses are financially negatively impacted by the subdued nature of domestic leisure travel together with the near total collapse of business travel as well as the imperative to conform to new COVID-19 safety and health protocols. Adaptive responses have included downsizing of businesses, including worker retrenchments, price-cutting, limited initiatives towards product diversification, energetic social media marketing and repurposing of properties. Key challenges for Bela-Bela tourism enterprises relate to immediate financial issues and most especially in the context that minimal support has been provided by national government to assist their business survival. Future business prospects are not viewed favourably such that business closures and a hollowing out of the tourism enterprise base accompanying job losses in tourism appear inevitable.

Determinants of small business performance in a selected region in South Africa : the role of entrepreneurial orientation and competitive advantage

Background: Small businesses in South Africa are an important engine for economic growth. However, the failure rate amongst such businesses remains high. Purpose of study: There is an increasing need for research that explores how small business performs especially on the African continent noted to have a high failure rate of enterprises. The aim of the study was two-fold. Firstly, to ascertain the relationship between entrepreneurial orientation and business performance. Secondly, the study sought to ascertain the mediating effect of competitive advantage on the relationship between entrepreneurial orientation and performance. Design/Methodology/Approach: The study adopted a positivist approach utilising the quantitative methodology to survey a sample of 177 small business owners/managers. Results/Findings: The findings show the existence of a positive and significant relationship between entrepreneurial orientation and business performance. Further, the findings also show that competitive advantage mediates the relationship between entrepreneurial orientation and business performance. Recommendations: Based on these findings, interventions are proposed that relate to how business performance can be improved within an African small business context. Managerial implication: In addressing the failure rate challenge faced by small businesses, the study encourages continued quests and interventions that promote competitive advantage and entrepreneurial capability development.

Formal Debt-Relief, Rescue and Liquidation Options for External Companies in South Africa

This article discusses how foreign companies doing business in South Africa during periods of financial distress and registered locally as external companies are, as a recent High Court decision confirms, denied the formal debt-relief measures of business rescue and therefore a compromise with creditors because of being excluded by the definition of “company” in the Companies Act 71 of 2008. Nor, for the same reason, may these companies, if solvent, rely on the current liquidation procedures. But they may possibly use the procedure preserved in the otherwise repealed Companies Act 61 of 1973 for liquidation as far as the transitional arrangements in the Companies Act 71 of 2008 allow. The purposive solution suggested in this article for the interplay between the two Acts may need legislative attention. This article surveys other possibilities relevant to these companies such as informal voluntary arrangements, applications for winding-up, ordinary debt collection, and perhaps compulsory sequestration applications. Finally, it raises the policy issue for the legislature to consider why these companies should be denied business rescue and/or a compromise with their creditors when these formal debtrelief measures might help them survive their financial stress and emerge stronger, to the advantage of themselves, their creditors, their stakeholders and communities, and the entire nation. It is submitted that these issues could and should be considered as part of the current law reform process of South African insolvency law.

Eco-Labels in the Tourism Sector in South Africa: Benefits and Barriers

The considerable increase in tourism activities over the years equates to notable economic and social benefits. Patent as one of the most emergent sectors of the global economy, the degree and prospect of tourism growth, however, raises concerns on its negative environmental and social impacts. Conserving these environments is of utmost importance as damage to environmental quality can eventually destroy the tourism industry. The launch of eco-labels to environmentally vulnerable tourism organizations and destinations is presently being implemented in many countries in an effort to protect the natural and socio-cultural resources of a destination. A number of eco-labels exist within the tourism industry in South Africa. These eco-labels are anticipated to have a profound effect on the contribution towards sustainable tourism within the country as these are considered to be highly compatible with sustainable tourism initiatives. This study provides an overview of eco-labels in South Africa and examines the benefits and barriers associated with eco-label certification. A quantitative research approach was used, and the data was collected utilizing an online questionnaire. A census sampling approach was used to target 104 tourism businesses in South Africa that have eco-label certification. The key eco-labels targeted in the study were the Blue Flag, Fair Trade in Tourism, Heritage Environmental Management Company, and GreenLine - certified by Heritage. The study revealed that tourism businesses in South Africa do experience several benefits through eco-label certification. However, businesses also encounter many barriers with eco-label certification in terms of high costs associated with being certified, the lack of general public awareness regarding eco-labels and the absence of government support. Consequently, cost reduction, promotion of public awareness as well as government support are the main areas of improvement suggested by tourism establishments with regards to eco-labels.

Strategic Orientation and Performance of Small Businesses in South Africa

Motivation: Most studies on strategic orientation have focused on financial performance while neglecting social and environmental performance. In this era of sustainable development, the performance of SMEs is better measured using the triple bottom line approach (financial, social and environmental). Studies that examine the effect of strategic orientation on the sustainable performance of SMEs are scarce. Novelty: The aim of the study is to explore the impact of strategic orientation on the sustainable performance of SMEs. While extant studies have explored the effect of strategic orientation on the financial performance of SMEs, this study used the sustainable measure of performance that included financial, social and environmental indicators. Methodology and Methods: The study followed the quantitative research design and a self-administered questionnaire was employed during the data collection process. Data was collected from one hundred and forty SME owners in a cross-sectional survey. The participants of this study were in the retail, service and manufacturing sectors. Data and Empirical Analysis: The Pearson correlation and regression were used for analysis. The Pearson correlation results indicated a positive correlation between strategic orientation and sustainable performance, while the regression analysis showed that strategic orientation has a positive impact on the sustainable performance of SMEs. Policy Considerations: South Africa is a signatory to the Paris Agreement on Climate Change and the United Nations’ Sustainable Development goals. The sustainable performance of SMEs can help to achieve these goals. The findings of this study can help small business owners to continuously acquire strategic orientation education for themselves and their employees. Agencies that support small businesses should organise seminars to train and educate SME owners on strategic orientation and sustainable performance.

Intra-family dynamics and succession planning in family businesses in South Africa: the daughter as a potential successor

PurposeLiterature considers the succession process to be successful when both the continuity of the business and harmony within the family are preserved. This study empirically investigates intra-family dynamics with regard to daughters as potential successors in family businesses.Design/methodology/approachThe study takes place in South Africa where family businesses represent a significant amount of all listed businesses on the Johannesburg Stock Exchange. A structured survey instrument is used to collect primary data from family businesses in South Africa. The study hypotheses are statistically tested using regression analyses.FindingsResults highlight the importance of the business context (BC), intra-family cohesion (IFC), intra-family adaptability (IFA) as well as the parent-daughter relationship (PDR) in successful daughter succession planning (SP). An important insight which emerges from the findings is the extent to which a harmonious business environment is conducive in accommodating the daughter as a successor to the business.Practical implicationsFamily business owners need to be aware of the often conflicting pressures that daughters face as potential successors. Evidence-based and fit for purpose to the South African family BC processes and directives must be formulated that guide the implementation of SP. The provision of training specifically focused on gender bias issues and women empowerment programmes in family business is recommended.Originality/valueInvestigating theoretical and practical problems related to daughters in SP in South Africa is important considering that firms in African countries in general tend to be poorly managed.

Sociological factors influencing the success of African immigrant-owned micro businesses in South Africa

The sociological imbalance of African immigrant-entrepreneur hampers the growth and progress of their businesses. Therefore, the need to investigate the sociological factors influencing the success of African immigrant-owned micro businesses in Durban, South Africa. The research approach adopted was a cross-sectional field survey with a total of 364 questionnaires distributed to African immigrant-entrepreneurs in Durban with the use of cluster sampling technique. The results of the study revealed that there was a significant strong positive relationship between sociological factors and the success of foreign-owned micro-businesses in Durban. It is therefore recommended that the government should creating an enabling business environment for African Immigrant-Owned Businesses, including the protection of the lives and property of the African immigrants and their micro businesses in Durban and country wide.

The Relationship Between Environmental Hostility and Entrepreneurial Orientation of Small Businesses

Declining entrepreneurship as indicated by low total early-stage entrepreneurial activity (TEA) and high business failure is unacceptable in any economy. This predicament is indicative of South Africa’s business environment as well as the entrepreneurial disposition of firms operating within it. However, the factors precipitating entrepreneurial behaviour among small firms are yet to be fully comprehended and the environment as a motivation for entrepreneurship among these firms is yet to be examined thoroughly. Furthermore, research focus on the antecedents of entrepreneurial orientation (EO) is limited, even as EO has been considered as an aggregated construct repeatedly with inadequate attention directed at its independent constituents. In response to these concerns, this study investigates the relationships between environmental hostility (EH) and the individual components of EO among small businesses in South Africa. Using a quantitative methodological approach, the study conducts a survey, and analyses data obtained through random sampling. Through exploratory factor analysis (EFA) and partial least square structural equation modelling (PLS-SEM), it is discovered that only four components of EO are statistically recognisable, contrary to five as widely acknowledged in literature. Positive associations were also revealed between EH and each of these dimensions to varying degrees. These findings underline the necessity for entrepreneurial action along the lines of risk-taking, proactive-innovativeness, competitive aggressiveness and autonomy among small businesses in South Africa, given the hostile environment of her small business sector.

A construction Industry Case Factors of commercial banks’ loan eligibility of small businesses in South Africa: a construction industry case

This study determines the factors that affect commercial banks’ loan eligibility of small businesses in the construction industry in South Africa. A multiple case study design and six randomly selected small businesses (i.e., three unsuccessful-declined and three successful-approved loan applicants) were used in this study. The qualitative methodology was applied to interview three senior managers from a commercial bank and six senior officials of the businesses, which had undergone the assessment process. The small enterprise assets finance applications of interviewed clients’ outcomes and the credit scoring outcomes either formal complaint letters or minutes were also evaluated after the credit scoring decision had been made to obtain more in-depth data.
 The main finding of the study was that client’s relationship, background, character, collateral, capital, capacity and affordability are major factors of loan eligibility of small businesses in South Africa. Of particular importance was that, typical relationship-based term loans were based on a business relationship built over years of lending, allowing for substantial flexibility in loan terms.

The Case of Construction Industr An Evaluation of the Lending Model of Commercial Banks in South Africa: The Case of Construction Industry

The purpose of this study was to evaluate the commercial banks’ lending model for small businesses in South Africa. The multiple case study design and purposive sampling were used to select six small businesses from a bank’s database for the study. The qualitative data was categorised and analysed thematically. It was found that the lending criteria are based on the bank and client’s long-term relationship, client’s background, character, collateral, capital, capacity and affordability, that the lending model is helping to grow small businesses in the country. The commercial banks’ lending policy should allow flexibility, among others, in terms of the minimum deposits and interest rates charged.

Chromaflo buys Rolfes pigment dispersions business in South Africa

Chromaflo buys Rolfes pigment dispersions business in South Africa