Micro Enterprises In South Africa Research Articles

Poor Performance of Small, Medium, and Micro Enterprises in South Africa: What has Race and Apartheid Got to Do with it?

Small, medium, and micro enterprises (SMMEs) are expected to contribute significantly to South Africa’s socioeconomic development. Despite the various private and public institutional agencies in place to bolster the role of SMMEs, these SMMEs continue to perform poorly. The poor performance of SMMEs has been linked to race and apartheid. Through a literature review, this study explored this attribution of SMMEs’ poor performance to race and apartheid, considering that many argue that the apartheid legacy is the root of many challenges encountered by SMMEs. The results are, however, ambivalent. They suggest that, although apartheid and race remain critical issues in explaining some existing structural challenges that SMMEs encounter, their effects may have been superseded by other post-apartheid issues that undermine SMMEs’ performance. Specifically, apart from continuing influences of apartheid-era challenges such as race-based barriers to markets and access to financial support, present-day issues such as corruption, bad governance, ill-conceived business strategies, and infrastructure challenges negatively influence the performance of SMMEs. Addressing these multifaceted issues requires coordinated efforts from the government, the private sector, and other stakeholders to create a conducive environment for SMMEs’ growth and success. We, therefore, conclude that the causes of the poor performance of SMMEs in South Africa stretch beyond race and apartheid and call for an exhaustive analysis of broader issues that undermine SMMEs’ performance in South Africa.

Analysis of the Business Inequalities Stimulated by the Fourth Industrial Revolution Between Corporates and Small and Micro Enterprises in South Africa

Most of the authors have discussed how technology could enhance the effectiveness and efficiency of the production in various businesses. Yet, there is still a gap in literature, and little has been researched about the business inequalities which are fuelled by the Fourth Industrial Revolution (4IR) between Small and Micro Enterprises (SMEs) and corporates. The aim of this paper is to theoretically analyse the business inequalities instigated by the 4IR between corporates and SMEs. The paper argues that the 4IR is advocated by the corporates to increase their production because they are well-resourced and is a disadvantage to the SMEs due to their poor resources. The inadequate analysis of the business inequalities due to the inception of the 4IR provides a vacuum for further conceptual investigation of the phenomenon. The paper used literature-based methodology to analyze the business inequalities brought by the 4IR between corporates and SMEs. This methodology provided an extensive conceptual review of the literature regarding the subject under investigation. This paper reveals that the critical factor of production in corporates appears to be technology which increases production. In that, the 4IR is beneficial to the corporates and a disadvantage to the SMEs. Therefore, the literature indicated that there is an inevitable huge inequality between corporates and SMEs. The paper concludes that there are great business inequalities between corporates and SMEs brought by the 4IR. Thus, the paper recommends the support structures/organizations to assist the SMEs to respond to the growing technology and attempt to close the business inequalities.

Challenges Facing ICT Use during COVID-19 Pandemic: The Case of Small, Medium and Micro Enterprises in South Africa

COVID-19 and its related restrictions have led to the closure of over 60% of Small, Medium and Micro Enterprises (SMMEs) largely due to the inability to move from physical to online business model. Using the desk research technique, this study examines the ICT challenges of SMMEs, coping strategies and the road map for redress in South Africa. Findings reveal challenges such as inadequate digital infrastructure, lack of funds for digital investment, lack of digital literacy, and nature of SMMEs’ business and trade model are major ICT use challenges faced by the SMMEs. SMMEs adopt measures such as laying off workers, changing to high consumable products, and changing marketing techniques to simple online marketing models and pricing strategies to cope with some of the challenges. Based on the findings, we recommend complementarity of the role of key stakeholders, including business owners, governments, telecommunication industry players or internet service providers, and business owners, as an indispensable approach. Businesses need to plan to build resilience against any unforeseeable eventualities that might have catastrophic impacts on their businesses. The government needs to provide financial bailout and business recovery funds at an affordable cost to businesses to help them acquire the necessary infrastructure needed to embrace the change. Furthermore, long-term investment in digital infrastructure by the government toward universal access to the internet by businesses is very necessary. It is also suggested that important industrial actors, such as those in the telecommunications industry, collaborate with the government to achieve universal access to the internet and other ICT technologies by people and SMMEs. This should include a digital literacy program to teach and equip businesses. Special interventions in the form of market security for businesses that are vulnerable are also recommended.

The impact of COVID-19 on small and micro-enterprises in South Africa

The impact of COVID-19 on small and micro-enterprises in South Africa

Modelling the relationships between the business environment, entrepreneurial orientation and employment growth amongst small, medium and micro-enterprises in South Africa

Purpose: This study seeks to model the nexus between environmental dynamism, environmental hostility, five sub-dimensions of entrepreneurial orientation (EO) (innovativeness, pro-activeness, risk-taking, competitive aggressiveness and autonomy) and employment growth.Design/methodology/approach: Based on a positivist research philosophy, this study adopts a quantitative methodological approach, which entails an online survey. Data is obtained through probability sampling of 1031 small, medium and micro enterprise businesses (SMMEs) and analysed using structural equation modelling (SEM).Findings/results: The findings reveal only four dimensions namely proactive-innovation, risk-taking, competitive aggressiveness, and autonomy as statistically visible, which is contrary to five as postulated in theory. In addition, it was found that the relationships between environmental hostility, environmental dynamism and the dimensions of EO were statistically significant. Conversely, the relationships between the dimensions of EO and employment growth were statistically insignificant except within the category of medium-sized businesses (MSBs) in which proactive-innovation and competitive aggressiveness indicated a statistically significant negative association with employment growth.Practical implications: A dynamic and hostile environment is essential to increased entrepreneurial intensity among SMMEs, but the size of the firm can be a determinant in their capacity for employment generation.Originality/value: The association between EO and employment growth has attracted less attention in research despite its theoretical and practical significance. Furthermore, studies on the antecedents of EO such as its relationship with environmental dynamism and hostility are limited. Following a multidimensional approach to EO, this empirical study illustrates its relationship with employment growth incorporating the component of the business environment. Regarding the plausibility of these associations, it distinguishes MSBs from the other categories of businesses within the SMME cohort.

The impact of COVID-19 on small and micro-enterprises in South Africa

The impact of COVID-19 on small and micro-enterprises in South Africa

An assessment of strategic decision-making processes among small and micro enterprises in South Africa

Orientation: Supporting agencies and small and micro enterprises in South Africa could be endowed with an integrated model that outlines the characterisation and patterns of strategic decision-making in the small and micro service sector that will assist in understanding and improving decision-making to enhance business sustainability and competitiveness.Research purpose: To assess the strategic decision-making process in small and micro service enterprises in South Africa.Motivation for the study: This study was motivated by the factors affecting small and micro enterprise sustainability which included deficiencies in the strategic decision-making process.Research design, approach and method: This study adopted a qualitative approach that captured the social realities of the decision-making process. The data collection techniques include semi-structured interviews of ten (10) respondents, four focus groups with five (5) respondents per group and five (5) businesses chosen for observation. Content analysis was used to analyse the data with the aid of NVIVO data analysis software. The data analysis software was used to organise data and identify themes.Main findings: The process of strategic decision-making is pivoted on the intuitive decision-making tendencies of the business owners which reveal iterative and concurrent characteristics.Practical/managerial implications: The effect of strategic decision-making is identified as a major challenge among small and micro enterprises leading to business failure. The implications of this research relate to identifying the most practical ways in which such decisions are formulated and devising mechanisms to enhance the decision-making process.Contribution/value-add: The pattern of strategic decision-making exhibited a greater tendency towards intuitive decision formulation as opposed to procedural rationality and that those businesses that attempted some form of methodological environmental scan as an influencing factor in the decision-making process adopted more of an assimilated approach in the intuitive-rational decision-making continuum rather than a completely procedural rational mode.

Perceived price and service quality as mediators between price fairness and perceived value in business banking relationships

PurposeThe purpose of this paper is to test perceived price and service quality as mediators between price fairness and perceived value in service encounters between micro-enterprises and their banks.Design/methodology/approachThe study is based on a self-administered and internet-based questionnaire conducted in the banking industry. The sample consists of 381 micro-enterprises in South Africa that employ one or two staff members.FindingsThe findings of this paper provide evidence for both theory and practice that perceived price and service quality influence the relationship between business banking customers’ perception of price fairness and the value of the service offered.Research limitations/implicationsThe measurement and structural properties reported are satisfactory. This paper confirms the hypothesized relationships in the tested research model, and rejects a tested rival model. Limitations are reported, and suggestions for further research are provided.Practical implicationsThis paper offers banking executives guidance in managing the pricing structure of their services, and highlights the value of offering greater transparency with regards to service charges and interest rates.Originality/valueThis paper contributes to insights into the mediating effects of perceived price and service quality between price fairness and perceived value in business relationships between micro-enterprises and their banks.

The impact of microfinance on microenterprises

The provision of and access to financial services, particularly credit, can contribute greatly to the development of microenterprises in South Africa. Such provision has been an issue ignored by conventional banks or formal financial institutions. The problem associated with this ignorance includes high transaction and operation costs, lack of collateral, and the inability to obtain information about microenterprises resulting in difficulties to extend such credit. Microfinance therefore becomes an alternative to conventional banking and a mainstream and sustainable development activity for extending credit to microenterprises. However, the benefits of microfinance, which include, among others, the ability to provide the much-needed financial support for microenterprises, have not been fully harnessed in South Africa. The objective of this article is to evaluate the impact of microfinance on microenterprises in a typical South African township and to propose specialized financial mechanisms to support and improve the provision of credit to microenterprises. The article draws on the findings of a study undertaken in the Ga-Rankuwa township located in the Tshwane Metropolitan area in the Gauteng province of South Africa. It further draws on a wide range of extensive review of literature that documents the impact of microfinance on microenterprises. A case study approach is adopted and mixed method research paradigm (qualitative and quantitative) is used to gather information. Structured questionnaires and interviews were used to solicit information from the randomly selected microfinance institutions and microenterprises in the Ga-Rankuwa township.

The Use of the Internet and Social Media by Microenterprises in South Africa

The main purpose of this paper was to investigate the utilization of the Internet and social media by microenterprises in South Africa. Forty microenterprises participated in the survey and data wa...

Success stories on non-formal adult education and training for self-employment in micro-enterprises in South Africa

PurposeThe purpose of this paper is to investigate the way the adult non-formal education and training (NFET) centres motivated and empowered graduates to start their own micro-enterprises as individuals or as a group. The specific objectives are as follows: to find out the transforming factors fostering the utilisation of acquired skills into self-employment in micro-enterprises; to investigate challenges encountered in starting and managing micro-enterprises and to investigate short-term impact of the NFET programmes and micro-enterprises on living conditions of graduates.Design/methodology/approachThe research design was multiple case studies. Semi-structured interviews and field observations were used for data collection in the qualitative study. In the context of non-probability sampling, the study used the purposive sampling method to select five out of 20 self-employed graduates for one-on-one interviews. Case studies also comprised some observations of activities in their small businesses.FindingsThe main findings reveal that “learning by doing” training approach and forming groups of entrepreneurs while being on the programme were major factors fostering the translation of acquired skills into micro-enterprises.Practical implicationsThe adult NFET is a tool to enable poor disadvantaged people to improve their well-being. However, this can be achieved if the livelihood skills training is combined with the creation of conducive environments to allow adult trainees become micro-entrepreneurs and self-reliant.Originality/valueThe study contributes to the knowledge of effective entrepreneurial training programmes by demonstrating the importance of involving stakeholders from the local communities and designing post-training support mechanisms for self-employment prior to the training delivery. The centre managers should also motivate trainees to start micro-enterprises in groups or co-operatives while still on the training programmes.

The Role of Government in Developing Small, Medium and Micro Enterprises in South Africa

AbstractThe study examined the role of the South African government in developing small, medium and micro enterprises (SMMEs). The study investigated if the owners of SMMEs (especially micro enterp...

The Influence of Supplier Involvement on Communication, Relationship Longevity and Business Performance in Small, Medium and Micro Enterprises in South Africa

Most firms are increasingly realizing the benefits of involving the outside suppliers by considering their manufacturing processes and technological capabilities, especially regarding quality, time to market, configuration, control and cost. Nevertheless, in the context of small to medium enterprises (SMEs), scant attention has been given to the empirical investigation into the influence of supplier involvement on business performance. The purpose of this study was to examine the influence of supplier involvement on business performance and the mediating role of communication and relationship longevity among SMEs in South Africa. Five hypotheses were posited and sample data of 302 were collected from Gauteng Province of South Africa, to empirically test these hypotheses. The results of this study showed that, supplier involvement has influence on communication, relationship longevity and business performance in SMEs context in South Africa. The managerial implications of the findings are discussed and limitations and future research directions are indicated.

The Financial Literacy of Micro Entrepreneurs in South Africa

The research investigated the level of financial literacy of the owners of new micro-enterprises in South Africa. This study used financial planning, analysis and control, book-keeping, understandi...

Enhancing Access to External Finance for New Micro-enterprises in South Africa

New micro-enterprises are of significant importance to employment creation, poverty alleviation and the economic growth of South Africa. However, the failure rate of new micro-enterprises in South Africa is very high. The study investigated access to external finance by new micro-enterprises in South Africa. Data was collected through the use of self-administered questionnaires in a survey. Because of the difficulty in obtaining the population of micro-enterprises in the study area, convenience sampling and the snowball sampling methods were used Descriptive statistics was used for data analysis. The results indicated that micro-enterprises encounter difficulties in accessing debt and equity finance. In addition, the awareness of government assistance programmes by the owners of micro-enterprises is limited. Recommendations to improve the access to external finance by micro-enterprises are suggested.

The Financial Bootstrapping Methods Employed by New Micro Enterprises in the Retail Sector in South Africa

New micro-enterprises in the retail sector are vital to the growth of the South African economy. Inaccessibility to formal debt and equity markets is one of the primary causes of the failure of new micro-enterprises in South Africa. Innovative financing methods are vital to the survival of new micro-enterprises in South Africa. This study investigates the financial bootstrapping methods employed by new micro-enterprises in the retail sector in South Africa. Data was collected through the use of self-administered questionnaires in a survey. Descriptive statistics and factor analysis were used for data analysis. Factor analysis identified four bootstrapping methods from twenty nine question items. These are owners’ resources, accounts receivable management, sharing resources and delaying payments. Recommendations to improve financial bootstrapping by micro-enterprises are suggested. DOI: 10.5901/mjss.2014.v5n3p72

An Investigation into the Business Social Responsibility of Micro Enterprises in South Africa

The purpose of this study was to examine the business social responsibility of micro enterprises in Mankweng, Limpopo Province, South Africa. The study had three objectives. (1) to investigate the attitudes of micro enterprises towards business social responsibility (2) to investigate the practice of business social responsibility by micro enterprises and (3) to analyse the barriers to the practice of business social responsibility by micro enterprises. Data was collected through the use of self-administered questionnaires in a survey. Univariate statistics was used for data analysis. The results indicated that micro enterprises have a positive attitude towards business social responsibility. In addition, the results indicated that the majority of micro enterprises are weak in community and environmental responsibility. Cost and limited information are the major constraints to the practice of BSR by micro enterprises. Recommendations to improve the practice of business social responsibility by micro enterprises are suggested. DOI: 10.5901/mjss.2014.v5n3p283

The Determinants of Longevity of Micro Enterprises in South Africa

This study investigated the determinants of longevity of micro enterprises in South Africa. This study is significant because of the high failure rate of micro enterprises in South Africa. Three hu...

Improving market access opportunities for urban small, medium and micro-enterprises in South Africa

Since the democratic transition of 1994, the promotion of the small, medium and micro-e nterprise (SMME) economy has been a core focus of South African government policy. With high levels of unemployment and poverty in urban areas, the impact of this policy intervention is most critical for city development. Given South Africa’s chequered history, the national government’s focus is on transforming the prospects for enterprises owned by black South Africans, who were disadvantaged under apartheid. This article examines the range of contempo rary policy initiatives to address business constraints on market access and catalyse new market opportunities for black-o wned enterprises in urban South Africa. The ar ticle concentrates on two themes: 1) building links into private sector supply chains, especially through supplier diversity, and 2) building links into public sector markets through public procurement. It is shown that current policy directions recognise that the national government has a limited capacity to implement SMME improvement and build competitive black-o wned SMMEs by itself, which has prompted support for private sector initiatives. In addition, the government is struggling to practice what it preaches and use its own procurement capacity to assist

A Cost Benefit Analysis of Public Finance Towards Small, Medium and Microenterprise Development in South Africa

Small businesses are recognized worldwide as a key element in economic and more particularly, industrial development. Most countries in the world have created special mechanisms to enhance and facilitate the creation and growth of Small Medium and Microenterprises (SMMEs). Despite the efforts by the government to establish a support structure for the small business sector in South Africa, to date this effort has not been successful. The failure rate of SMMEs is between 70% and 80% and millions of Rands are being lost on business ventures. The objective of this paper is to analyze the welfare impact of public expenditure on small, medium and microenterprises in South Africa. This research makes use of a cost benefit analysis on a sample of 226 small businesses which had received some form of non-financial support from local business service centers during the period 2001 to 2005. Using a benefit cost ratio as a decision-making criteria and subjective measurements on a three-point Likert scale, the results suggest that public finance on SMME promotion in the Eastern Cape yields positive social returns albeit that the small businesses still face a number of constraints. It is recommended that a holistic approach towards SMME support intervention is adopted, otherwise the social returns derived from public expenditure in SMME promotions will remain sub-optimal.