Small And Medium Enterprises In South Africa Research Articles

Small and medium business transformational leadership and supply chain management

The performance-related problems facing small and medium enterprises (SMEs) in South Africa are well known. Efforts to find lasting solutions are ongoing and include empirical research focusing on various business practices and models. Applying leadership practices and supply chain management to SMEs provides fertile ground for groundbreaking solutions. This study tested the relationship between transformational leadership, supply chain execution and supply chain performance in manufacturing SMEs in South Africa. The study uses structural equation modelling to examine this empirical connection using data collected from 411 professional employees drawn from SMEs in three South African provinces. The study found that idealised influence and intellectual stimulation exert a positive impact on supply chain execution. Supply chain execution is positively linked to four supply chain performance factors, namely agility, reliability, cost optimisation and responsiveness.Transdisciplinary contribution: The study connects transformational leadership, which is an organisational behaviour construct to supply chain management, the latter of which is an emerging business discipline. The study recognises that business strategy is implemented by people whose conduct and practices are pivotal to strategic success. In addition, the study has an entrepreneurship orientation as it addresses the challenges facing manufacturing SMEs in South Africa.

Institutional development as a tool to facilitate economic access for South Africa’s SMEs: the case of the Development Bank of Southern Africa

The lack of economic access is one of the main challenges facing small and medium enterprises (SMEs). It contributes to the elevated levels of unemployment and slows the resolution of high inequality and poverty in South Africa. Economic access is the ability of historically disadvantaged individuals and entities to participate in the economy. This study aimed to explore how institutional development can support economic access for SMEs. The study explored how setting up new or improving existing socio-economic structures or legal entities could support economic access for SMEs. The support received by SMEs in South Africa from three institutions, the Independent Power Producer Office (IPPO), the Infrastructure Delivery Division (IDD) and the Development Laboratories (DLabs), set up by the Development Bank of Southern Africa (DBSA) was assessed. Quantitative data from the DBSA and IPPO, as well as qualitative views from informants, were used to assess the economic access of SMEs. The study shows that the IPPO, IDD and DLabs added value by achieving the objectives for which they were created. Furthermore, the results show that institutional development supports economic access for SMEs, and that this support is scalable. The study showed that institutional development could be a tool to support SMEs to participate in the economy. This study contributes to the body of knowledge on ways to support SMEs to grow and contribute to reducing unemployment, inequality and poverty.

Understanding the Motivations for SMEs in South Africa to Adopt Social Media

Since the covid-19 pandemic in 2020, many businesses have relied on social media to stay abreast with the latest news, developments and to predict the future world of business. Many countries around the world instigated lockdown restrictions to curb the spread of the covid-19 virus, and social media platforms were very popular tools used for spreading the news. The proliferation of social media has also increasingly drawn the attention of Small and Medium Enterprises (SMEs) in South Africa to improve their efforts of sustaining their businesses.  Social media platforms have become popular in the business environments for their ability to increase market reach, transfer knowledge, and sustain the business. While many benefits of social media to enhance business performance have been studied, there are also skeptics on data privacy issues that social medial brings to the business. In the SME sectors in South Africa, social media are adopted due to their cost effectiveness and ease of use. However, little is known about the effect of data privacy issues on SME business performance. The literature of social media adoption indicates that the older generation of SME owners are skeptical about sharing their confidential business insight on social media platforms. This is despite the availability of many other literature studies that report on the increase of social media studies to enhance business sustainability. This study aims to produce knowledge for understanding the key motivations of SMEs to adopting social media despite the existence of data privacy issues on social media. Qualitative interviews were conducted with 13 SME entrepreneurs who were purposively selected based on their knowledge of social media, experience of its application in the business, industries and premises of the SME business in South Africa. The results of the interviews indicated that SMEs are generally aware of the data privacy issues surrounding the use of social media, and the adoption rate differs from younger and older generation of SME entrepreneurs.

Optimizing Mobile Commerce to Improve Small and Medium Enterprises Markets

Mobile commerce (m-commerce) enables individuals and organizations to buy and sell products on the internet. Despite the growth of m commerce in developed countries, research studies indicate that Small and Medium Enterprises (SMEs) in developing countries are still far behind in adopting m-commerce. The theory of Diffusion of Innovation (DOI) was adopted to underpin the study. A quantitative approach was used in this study. The researcher collected data from a random sample of 150 SMEs in South Africa, in the Limpopo province. The study used structural equation modeling (SEM) to analyze data. In this study, the results of SEM indicate that trialability is the most significant factor in predicting the adoption of m-commerce in South African SMEs. Furthermore, the findings of this study also show that relative advantage, compatibility, complexity, observability and owner/manager characteristics are not significant in predicting the adoption of m-commerce in South African SMEs.

Transactional leadership and its effect on supply chain management in manufacturing SMEs

The continued lacklustre performance of small and medium enterprises (SMEs) in South Africa has brought the quest for lasting solutions. One of the options available is to tap into the areas of leadership and supply chain management (SCM) as potential sources of SME growth.
 This study analysed the link between transactional leadership and SCM in manufacturing SMEs in South Africa. The research constructs included transactional leadership, supply chain execution (SCE), and performance.
 The research was conducted in Gauteng, North-West and the Free State provinces. Furthermore, the study focused on established manufacturing SMEs, registered with the Small Enterprise Development Agency (SEDA).
 A quantitative research approach using a correlational design was used. 411 SME owners, managers and professional employees participated in the study.
 Management by exception exerted a positive effect on SCE. In turn, SCE positively impacted customer service (CS) but did not affect supplier performance.
 The impact of transactional leadership on the execution of SCM in manufacturing SMEs is minimal and is demonstrated through management by exception. Effective implementation of SCM in these businesses is essential for optimising CS.

Social Networking Sites: A panacea for enhancing productivity in the organisation during Covid-19 crisis, the case of tourism SMEs in South Africa

Social networking sites are regarded as useful catalysts for enhancing organisational work productivity and creativity. In the wake of the COVID-19 pandemic, the spin-offs associated with these particular platforms have become even more evident. Consequently, this study sought to explore the added benefits of using social networking sites to improve the work productivity and creativity of selected urban tourism-related Small and Medium Enterprises (SMEs) in the City of Tshwane, South Africa. The exploration of the researchquestions of the study suggests a theoretical framework that consists of key elements of diffusion and adoption of technology. As a result, Roger’s Diffusion of Innovations Theory proved to be most applicable as it offers a relevant analytical framework for the dissemination and adoption of technology. The study adopted a qualitative approach by conducting interviews with a targetedpopulation of SME service providers in the context of Pretoria (Tshwane) in the Gauteng province. The sample consisted of 50 such service providers that were selected using purposive sampling. Sampled SMEs included: 20 "bed and breakfasts", 20 guest houses, and 10 tour operators. Interviews were then conducted with their relevant managers. The data were analysed using open coding, where dominant themes from the discussions were identified and discussed in detail. 

AN INVESTIGATION OF THE EFFECT OF THE ISO 9001 QUALITY MANAGEMENT SYSTEM ON SMALL AND MEDIUM ENTERPRISES IN GAUTENG, SOUTH AFRICA

The implementation of quality management systems (QMS) is central to the performance of small and medium enterprises (SMEs). At present, there is a lack of information about the level of adoption and implementation of QMS by SMEs in Gauteng Province, even though that province has the highest number of SMEs in South Africa (SA). This study therefore aims to investigate the effect of the ISO 9001 QMS on SMEs in Gauteng. Quantitative research was conducted, and an online survey was used to collect data. An inferential statistical data analysis involving the Statistical Package for the Social Sciences (SPSS) software was used to analyse the collected data. The chi-square and Fischer’s exact tests were applied to validate the statistical significance of four hypotheses. The inferential analysis showed that there is a relationship between ISO 9001 implementation and SMEs’ sustainability, as well as a direct relationship between the implementation of ISO 9001 and the performance, growth, and life span of SMEs in Gauteng Province. In addition, the results indicated that 64 per cent of the surveyed SMEs are aware ISO 9001, while 36 per cent of SMEs were not aware of QMS. The survey indicated that SMEs face several challenges, such as the ineffective implementation of QMS, poor funding, a low level of human capacity development, a lack of adequate resources, poor working environment, and poor work organisation, a lack of necessary materials, and the use of inappropriate work methods. It is envisaged that, if a culture of QMS were to be adopted and implemented by SMEs, there would probably be an improvement in operational efficiency, leading to improved customer satisfaction and increased turnover and profitability. Keywords ISO 9001; LMS; QMS; SME; Sustainability

Regression analysis of the influence of demographic characteristics using risk management practices within South African small and medium construction enterprises

PurposeDemographics are perceived to influence risk management practices (RMPs) in construction. However, empirical evidence supporting this perception is lacking in the South African Construction Industry (SACI), especially within small and medium enterprises (SMEs). This study, therefore, aims to investigate the influence of demographic characteristics on RMPs.Design/methodology/approachThis study followed a positivist research philosophy, using a questionnaire survey for data collection. In total, 225 questionnaires were distributed, of which 187 were returned from conveniently sampled respondents, which included owners and senior managers of construction SMEs organizations in Gauteng province in South Africa (SA). In total, 181 questionnaires were usable, yielding a response rate of 80.44%. Data from the survey were analyzed using descriptive and inferential statistics i.e. multiple regression analysis (MRA). The outputs were represented using percent and regression coefficients values, respectively.FindingsIn total, 42 practices were established from the literature review and grouped into 9 major RMPs. The data analysis suggested that understanding the organizational environment, defining objectives, resource requirements, risk measurement, risk identification, risk assessment, risk response and action planning, communication and monitoring and review are reliable and valid practices. Findings from MRA established that demographic characteristics i.e. experience in the construction industry (CI), education level and the number of employees in the organization are not good predictors to determine the use of RMPs.Research limitations/implicationsThe study was limited to the data acquired from the SACI and to a lesser extent, construction SMEs in Gauteng. Therefore, the findings cannot be generalized to all SMEs in SA. Though neighboring and developing countries can use the RMPs identified in this study, the results cannot be directly used in developed countries without adequate substantiation.Practical implicationsThe current study provides useful information to assist construction organizations to pay more attention to risk management implementation. The RMPs established in this paper are reliable and valid in projects undertaken by SMEs, and therefore, may be used by top management and/or the risk task team of these enterprises for effective project risk management.Originality/valueThe study presents findings of an investigation of the influence of demographics on RMPs from the perspectives of construction SMEs, an area less explored. This work advances knowledge of RMPs in the SME sector. It, therefore, adds value to researchers and industry practitioners on the theme where no agreement has been attained relating to key factors and practices that should constitute a risk management model.

Assessment of time management practices of small medium sized contractors in project delivery in the Eastern Cape Province, South Africa

The purpose of this article is to assess the effective time-management practices adopted by construction SMEs to enhance successful construction project delivery. A mixed methods approach, consisting of both quantitative and qualitative research methods was adopted. A questionnaire was distributed to Small and Medium Enterprises (SMEs) management team purposively selected from CIDB Grades 1 to 4 registered contractors under the general building category. The quantitative data were analysed, using descriptive statistics. To validate quantitative findings, semi structured interviews were conducted with randomly selected respondents who were part of the survey study where content analysis was adopted. The findings revealed that the most adopted effective time-management practices to enhance the sustainable success rate of construction SMEs in South Africa included progress meeting with consultants to ensure regular monitoring of the work progress, strategic planning to recover time lost, effective management of subcontractors, and allocation of tasks to workers according to their skills and expertise. It should be noted that the quantitative findings were consistent with the qualitative findings, and revealed that effective project planning, periodic progress meetings and labour production contribute to the sustainable success rate of SMEs.  The results obtained from this article could be adopted as SMEs’ effective time-management practices to enhance sustainable construction project delivery.

Supply chain management and organizational performance: Evidence from SMEs in South Africa

ABSTRACT The salutary impact of adopting supply chain management best practices (SCMBPs) on organizations is well documented. However, similar studies on small and medium enterprises (SMEs), especially in underdeveloped/developing economies are relatively scant in the extant literature. This is despite the well- documented role of SMEs in stimulating economic growth and competitiveness in developing economies such as South Africa. This empirical study employed a total of 407 randomly selected South African SMEs to investigate the relationships between SCMBPs, supply chain agility, risk management and supply chain performance in South African SMEs. To the best of our knowledge, this represents the most extensive empirical study on the subject undertaken for an emerging economy in Africa and the only one that studies the relationships between these supply chain issues. Structural equation modeling indicated that the adoption of SCMBPs predicted better supply chain performance. This clearly underscores the importance of SCMBPs adoption, even for SMEs in an underdeveloped/developing economy.

The role of business incubators in creating sustainable small and medium enterprises

Background: Despite the prevalence of business incubators as platforms through which new ventures can be technically and financially supported, there is controversy on the extent to which a one-size-fits-all approach to business incubator support can be applied to all emerging or existing small and medium enterprises (SMEs). Aim: To explore the value addition and role of business incubators to assist entrepreneurs to grow their businesses to enable them to become entrepreneurial leaders. Setting: State of SMEs; Business incubators; the development of entrepreneurs in South Africa. Method: A literature survey regarding the nature of business incubators was conducted, making use of a convenience sample comprising a pre-published list of 58 business incubators. Results: Business incubators see themselves in a position of strength and are not in a true partnership with the incubatee. Most business incubators only support Broad Based Black Economic Empowerment candidates, ignoring the needs and value-add of a diverse SME population. Findings highlighted the conflicting information about the state of SMEs in South Africa, thereby calling for policies to clearly and uniformly report reliable statistics on the status of SMEs to enable more focussed support for SMEs. Conclusions: Business incubators must clearly conceptualise their own business operating model and articulate their value-add to prospective emerging entrepreneurs. Post COVID-19 it is essential to fast tract the sustainability of SMEs and role clarification and differentiating are two important factors that need to be taken into consideration by both business incubators and entrepreneurs to ensure focussed support and allocation of public and private funding.

An Analysis of Challenges obstructing Growth of SMEs in the South African Tourism Sector: A theoretical evaluation

The study empirically sought to analyse challenges inhibiting the growth of Small and Medium Enterprises (SMEs) within the tourism sector in South Africa. The study employed qualitative research design following the in depth interviews in order to gather data form tourism SME owners and managers in South Africa, who formed the sample population for the study. A sample of 20 respondents was drawn using purposive sampling approach. The participants who were selected were tourism SME owners and managers of guesthouses, lodges and bed and breakfast houses, shuttle transport, art and craft curio shops and agricultural sector. The researchers has provided a perspective on the role of tourism SMEs in South Africa.  The study identified the hindering challenges for tourism SMEs development and growth as lack of access to funding, inadequate or unavailable government funding, lack of entrepreneurial and management skills to operate their businesses, lack of networking connections, poor location of SME operations and stiff competition for well-established SMEs. The recommendations were made that alternative funding strategies should be used, SME owners and managers should be trained, the SMEs should join network groups and share ideas, and they should also invest in marketing and communication technologies for their products to be known to the market. Keywords: Small and Medium Enterprises, tourism, economic growth, inclusive growth DOI: 10.7176/EJBM/12-22-06 Publication date: August 31 st 2020

Underlying structures of risk response measures among small and medium contractors in South Africa

Although attention has been given to the measures used to respond to risk in the construction industry (CI), there is limited literature that scrutinizes underlying structures of risk response measures (RRMs) especially among small and medium enterprises (SMEs). This study, therefore, presents findings from an exploratory factor analysis (EFA) of RRMs. A positivist paradigm was adopted to collect empirical raw data from 181 conveniently sampled respondents in Gauteng, South Africa (SA), using a structured questionnaire. The results support the extant literature and empirically established the structural composition of risk response by two constructs. The construct with emerged measures was termed trailing measures while the one with popular measures was termed leading measures of risk response. However, the study yielded a two-factor model with all the six items supposed to measure risk response. Based on the results obtained, it seems that risk avoidance and risk mitigation are reliable measures for measuring risk response. This study could thus serve as a reference for the accurate measurement of risk response and for the development of agreed responses for each risk, including an appropriate strategy and specific responses to implement the chosen strategy. The study was limited to the CI and to a lesser extent, construction SMEs in Gauteng; hence the findings cannot be generalized to all SMEs in SA.

Is the Alternative Exchange achieving its objectives? A capital structure perspective

Orientation: Despite their significant contribution to the South African economy, the majority of small and medium enterprises (SMEs) fail because of lack of access to appropriate types of capital. The Alternative Exchange (AltX) was established to address the lack of access to equity finance for SMEs. Research purpose: This study aims to determine whether the AltX has adequately enabled access to equity finance for the firms listed thereon. Motivation for the study: This study was motivated by the apparent lack of SME access to appropriate forms of finance. By evaluating the effectiveness of the AltX, the study seeks to investigate whether further measures are required to enable access to equity finance for SMEs. Research design, approach and method: A quantitative methodology was employed and panel regression models were used to compare the levels of equity and debt of firms listed on the AltX to those listed on the Johannesburg Securities Exchange’s (JSE) main board. In this manner, the study aims to determine whether AltX firms enjoy the same level of access to capital markets as their counterparts on the JSE. Main findings: The findings indicate that firms listed on the AltX have significantly higher levels of debt than those listed on the JSE’s main board. This debt tends to be the more accessible yet risky short-term debt. Practical/managerial implications: The findings infer that despite the establishment of the AltX, SMEs still face considerable constraints to accessing equity finance and, as such, may be compelled to consider other means of raising finance. Contribution/value-add: This study contributes to the research on SMEs in South Africa and suggests that further interventions are required to enable their access to appropriate forms of finance.

A generic balanced scorecard for small and medium manufacturing enterprises in South Africa

Background: Prior research confirmed that the balanced scorecard (BSC) can be used successfully at manufacturing small and medium enterprises (SMEs), to assist with sustainability. South African SMEs have a low survival rate despite being a significant contributor to the local economy with the manufacturing sector in particular hampered by negative growth.Aim: The objective of this study was to develop a BSC for manufacturing SMEs in South Africa with measurable key performance indicators (KPIs).Setting: We conducted a Delphi study with cost accounting specialists in different industries.Methods: The development of the generic BSC was facilitated with a Delphi survey and analytical hierarchy process (AHP).Results: The research presents a generic yet flexible BSC for manufacturing SMEs. A total number of 12 generic and 104 specific KPIs were identified. The results revealed a greater emphasis on the financial and customer perspectives that may be conducive to SME sustainability and success.Conclusion: A generic BSC that can be adapted to specific organisational and industry requirements has the potential to enhance SME sustainability and success.

The Impact of Entrepreneurial Resilience on the Success of Small and Medium Enterprises in South Africa

Small and medium enterprises (SMEs) have a significant role to play in a country’s sustainable development. The measures of a country’s sustainable development include economic and social factors. The sustainability of small and medium enterprises is vital to job creation, poverty reduction, and sustainable economic growth. The high failure rate of SMEs negatively impacts on South Africa’s sustainable development. The purpose of the study was to investigate the relationship between entrepreneurial resilience and the success of SMEs in South Africa. Success was measured using both organisational and individual criteria. The Connor–Davidson Resilience Scale 10 (CD-RISC 10) was used to measure entrepreneurial resilience. Data was collected from 170 small business owners through the survey method. The self-administered questionnaire method was used to collect data from the participants. Convenience and snowball methods were used for sampling. Descriptive statistics, confirmatory factor analysis, correlation, and regression analysis were used for data analysis. Cronbach’s alpha was used as a measure of reliability. The results indicated that there is a significant positive relationship between entrepreneurial resilience and individual and organisational success. Ways to enhance the resilience of small business owners in order to ensure the sustainability of SMEs are suggested.

Extending green supply chain management activities to manufacturing small and medium enterprises in a developing economy

Background: The implementation of green supply chain management activities as a business strategy remains unfamiliar to many small and medium enterprises (SMEs) in developing countries such as South Africa. Setting: Implementation of green supply chain management activities by South African SMEs is necessary, given both the high failure rate of such enterprises in the country and the proven ability of such activities to promote the success of businesses. Aim: The aim of this study was to investigate the relationship between green supply chain management activities, operational performance and supply chain performance in manufacturing SMEs in South Africa. Methods: Data were collected from 219 manufacturing SMEs operating within Gauteng. A confirmatory factor analysis was conducted to assess the psychometric properties of measurement scales. Hypotheses were tested using structural equation modelling. Results: Four green supply chain management activities, namely green purchasing, reverse logistics, environmental collaboration with suppliers and green manufacturing, exerted a positive influence on operational performance. Environmental collaboration with suppliers exerted the highest influence on operational performance when compared to green purchasing, reverse logistics and green manufacturing. In turn, operational performance exerted a strong positive influence on supply chain performance. Conclusion: The results of the study suggest that manufacturing SMEs in developing countries could benefit by adopting green supply chain management activities, with improvements being realised in terms of increases in both operational and supply chain performance.

The Role of Mimicry Isomorphism in Sustainable Development Operationalisation by SMEs in South Africa

The study surveyed 222 small and medium enterprises (SMEs) from the Limpopo province of South Africa on the impact of mimicry isomorphism in making sustainable development operational. The research made use of self-administered questionnaires which were distributed, and the convenience sampling technique was used. Data analysis primarily comprised of exploratory factor analysis (EFA) through SPSS software version 24 confirmatory factor analysis (CFA) and structural equation modelling (SEM) through AMOS software version 24. The SEM results revealed that all three measured dimensions of sustainable development—namely, economic, environmental, and social—were significantly influenced by mimicry isomorphism. As such, the implications of the study are that strong evidence exists pertaining to the operationalisation of sustainable development due to mimetic isomorphism.

The benefits of good corporate governance to small and medium enterprises (SMEs) in South Africa: A view on top 20 and bottom 20 JSE listed companies

Good corporate governance has been attributed to many large organizations’ success. From the boardroom to the triple bottom line, it has been hailed as one powerful tool that brought about sustainability of these organizations in this competitive era. While this is beneficial to large organizations, small and medium enterprises (SMEs) can glean on such experiences to add their value to their companies which, in the long run could bring about new markets and improved business practices which can be ground breaking in their daily business dealings. Thus, if with the introduction of the King Report on good governance, competitive advantage is improved, SMEs are in a good position to sustain their businesses in turbulent economic conditions. This article is aimed at exploring the benefits with which good corporate governance can yield to top and bottom JSE listed SMEs in South Africa. A desktop method was used to analyze the financial statements of these SMEs companies with the view to gain understanding on their corporate governance activities and how well they benefit them. The findings show that good corporate governance is beneficial to SMEs.

The Relationship between Learning Orientation and the Performance of Small and Medium Enterprises in South Africa

Small and medium enterprises (SMEs) are an important vehicle in income re-distribution, poverty alleviation, employment creation and contribute to the gross domestic product of South Africa. However, SMEs in South Africa suffer from a weak level of performance and a high failure rate. The main objective of this study was to investigate the impact of learning orientation on the performance of SMEs. A quantitative approach was used, while a self-administered questionnaire was also employed during data collection process. A three- section questionnaire covering demographic information, learning orientation variables and performance variables was prepared and distributed randomly to a selected sample of 390 SME owners in Msukaligwa Local Municipality in Mpumalanga Province of South Africa. A total of 181 questionnaires were returned. Descriptive statistics, factor analysis, correlation and regression analysis were used for data analysis. The Cronbach’s alpha was used to measure reliability. The results of the study revealed a significant positive relationship between learning orientation and the performance of SMEs. Recommendations to improve the learning orientation of SMEs are suggested.