South African Small And Medium Enterprises Research Articles

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.

The use of Software as a Service to improve the Dynamic Capabilities of South African Small and Medium Enterprises

Business aspects such as sales, human resources management (HRM), marketing, accounting, and customer relationship management (CRM) are important for Small and Medium Enterprises (SMEs). Therefore, it is anticipated that SMEs will get to benefit from using innovative technologies (IT) such as Software as a Service (SaaS). SaaS is a Cloud Computing model where applications, resources, and services are provided by the service provider (SP) to SMEs and accessed via the internet. SaaS may transform SMEs. One of the major benefits of SaaS is its dynamic capabilities. Despite the benefits of SaaS, the utilization of this technology in SMEs, particularly in developing countries is still limited. This research study aims to develop a conceptual model for the use of SaaS to improve the dynamic capabilities of South African SMEs. In this study, the theory of Technology-Task-Fit (TTF) will be adopted and used to underpin the study. A positivist research paradigm will be adopted. The study will use a quantitative research approach and data will be collected from 344 SME managers in South Africa using a questionnaire. Structural equation modeling (SEM) will be applied in this study to analyze the data.

The influence of digital transformation on the growth of small and medium enterprises in South Africa

From a global perspective, the business environment has become highly dynamic, unpredictable, and competitive due to external forces – mostly technology – that generate change. The aim of this study is to investigate the influence of digital technologies on South African business sectors. The sample includes small and medium enterprises (SMEs) in the KwaZulu-Natal province. Being qualitative by design, the study used semi-structured interviews for data collection, with eight interviews in the Durban area. SME managers were purposefully selected as participants based on their management positions in the business/company and that they oversee the business operation and understand the influence of digital transformation in the business. The interviews were then transcribed after data collection to determine any recurring themes. In the effectiveness of digital transformation, the study identified themes such as “gaining exposure” and “gaining effective sales figures” as a result of implementing digital transformation, which was indicated by six of eight participants. The findings showed that digital transformation significantly affects building customer relationships and ensuring easy accessibility of the business. The results further indicate online selling and digital marketing as the leading digital platforms successfully implemented by most South African SMEs. Lastly, the study revealed digital maintenance and rapid changes in technology as challenging factors. Moreover, the study recommends that South African SMEs implement more available digital technologies to gain additional exposure.

A framework for the integration of lean, green and sustainability practices for operation performance in South African SMEs

ABSTRACT To make small and medium enterprises (SMEs) competitive, they not merely concentrate the results of the operational measures and combine the environmental dimension by adopting lean and green models together. The present literature study proves that lean activities in SMEs have a direct positive effect on green and sustainable practices. However, the combined effect of sustainable, lean, and green has not been investigated empirically. This paper aims to identify the relationship between lean, green, and sustainable practices for environmental development economic efficiency among small and medium-sized enterprises. The structural equation modelling technique was used to examine the direct effect of lean practices on sustainability, with green manufacturing as the mediating variable. The research depends on the collection of data from 210 manufacturing organisations. The result of the study indicates that lean practices directly affect sustainability and confirm that green manufacturing is a significant mediating parameter. These findings will be used to establish a comprehensive model for the sustainable lean, green system to direct small and medium-sized enterprises to achieve sustainable development. The research results can benefit in making the policies for industrial professionals on (SMEs) by focusing on critical issues to help implement and evaluate sustainable, lean, and green practices

Establishing Core Factors of Risk Management Influencing Performance Outcome of Small and Medium Firm's Construction Projects in Gauteng

The quest for delivering successful construction projects has urged South African small and medium enterprises (SMEs) to adopt risk management in their projects. However, it has been evinced that SMEs projects in South Africa especially in the Gauteng province have encountered poor performances. Thus, this article determines core risk management factors influencing project outcome of SMEs. A deductive approach was embraced using a questionnaire. The data were collected from 181 conveniently sampled respondents in Gauteng, graded from Grade 1 to 6 of the CIDB (Construction Industry Development Board) grading system. The Statistical Package for the Social Science (SPSS) version 23 was used to analyse the data by computing exploratory factor analysis and multiple regression analysis. It was revealed that SMEs performance outcome is influenced by eight risk management factors. The influential factors are organisational environment, defining project objectives, resource requirements, risk measurement, risk identification, risk assessment, risk response and action planning and monitoring, review and continuous improvement. The risk management factors established in this article are reliable and valid in projects undertaken by SMEs in the South African construction industry and the findings can serve as a guideline for contractors to achieve success in this context. The study may be repeated in other countries globally, however, it cannot be generalised due to the restrictions pertaining to the geographical area.

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.

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.

Exploring SME cybersecurity practices in developing countries

ABSTRACTThe continued use of information technology systems by small and medium enterprises (SMEs) in developing countries has the potential to bring significant benefits but, at the same time, expose them to online cybersecurity threats. Addressing these threats is, therefore, of paramount importance for developing countries, not only because SMEs are seen as the vehicle for employment and job creation, but because research on SMEs and cybersecurity in this context is limited. This study is a contribution toward addressing this gap.The purpose of this study is, therefore, to explore SME cybersecurity practices and the challenges they face in developing countries. The goal is to sensitize practitioners and government institutions about the challenges and practices faced by SMEs, so that the various parties can work collaboratively in providing context-specific solutions to address these challenges and improve current cybersecurity practices. The study follows a qualitative enquiry approach to solicit information from three South African SMEs that had implemented cybersecurity practices. The findings show that an SME’s perception of cybersecurity is constrained by internal factors of budget, management support, and attitudes. Further findings show that SMEs’ cybersecurity practices are affected by the landscape of cybersecurity, as well as institutional pressures.

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.

Marketing fortification of business through crowdsourcing and social responsibility: focus on South African SMEs

This paper investigates networking and related activities for marketing performance of small and medium enterprises (SMEs) for the sustainable development and the preservation of the environment. These SMEs have limited business skills and knowledge, and don`t have any marketing funds. As a clearly growing trend aspect in business, networking approaches were blended to find approaches to help these SMEs to take their market niche. Thirty-seven (37) SMEs were used as a convenience sample to experiment with the concepts. They were investigated on what could optimize marketing results and what could offset marketing benefits. The paper finds out that networking provides effective marketing when is modeled under crowdsourcing. Options for crowdsourcing could also involve local organizations in the marketing networks. SMEs should document their activities for proper accountability and transparency. They should also use incentives to volunteers and crowdsourcing participants by giving them shares and be proactive in their approaches. Further, SME practitioners should require them to learn business skills.

Internet-Based ICT Usage By South African SMEs: The Barriers Faced By SMEs

Previous research estimates that 8 out of 10 small and medium enterprises (SMEs) do not operate for more three years (Mason 2015). According to OECD ([sa]), the major problems encountered by SMEs relate to financing and regulatory burdens. However, with information technology, SMEs are able to narrow the information gap, which leads to improved strategies and decision making (OECD [sa]). In today’s competitive world, information communication technology (ICT) is recognized as a crucial success factor for SMEs. ICT refers to the accessing and communication of information using various technologies such as the internet, wireless networks and cellphones (TechTerms 2010). This research study investigates SMEs’ perception of the barriers in adopting ICT in the South African context. The objective of this paper is to determine ICT adoption and the perceived barriers associated with it among South African SMEs. A review of ICT within an SME context is examined. Through judgement sampling, a questionnaire was distributed to gather the responses of 90 SMEs. The most important barriers that were highlighted by the results of the study are the high cost of ICT systems as well as the lack of knowledge to maintain and use ICT. The challenge is to ensure that South African SMEs continue to increase the adoption of ICT. It is envisaged that by determining the barriers they face and providing recommendations as to how they can overcome these barriers, this research will assist SMEs to become more successful, as they play a vital role in the South African economy.

How South African SMEs could escape ‘the heavyweight knockouts’!

Small and medium enterprises (SMEs), which, over the years, were in charge of supplying goods to rural areas and townships, are fast losing markets to large business. Modern customers want value-for-money through high-quality products at low prices, greater convenience, and a wide range of choices. Large enterprises are capable of meeting these demands. Hence, they have a competitive advantage over the SMEs. In addition, large corporations can deliver the convenience of one-stop-shopping. This paper exposes SMEs options useful for offseting the might of large business. It highlights the available routes for strength creation. One option is to step aside temporarily while running the SMEs, but preparing fully for future competition. Another option is to fill the gaps left by large companies while preparing to contest face-to-face. Recommendations are that SMEs should exploit available empowerment opportunities and, then, use methods of advantage to work in the presence of large businesses. SMEs can delay direct competition until the time is right. Keywords: competition, empowerment, large enterprises, SEDA, SMEs. JEL Classification: D41, D51, D83.

INVESTIGATING AND EVALUATING THE INFLUENCE OF SUPPLY CHAIN STRUCTURE ON SUPPLY CHAIN RISK

Supply chains are exposed to disruptions resulting from internal or external factors that hinder the performance of one or more of their constituent entities. An exploratory study was conducted to determine whether supply chain structure (SCS) influences supply chain risk (SCR), in the context of small and medium enterprises (SMEs) in South Africa. Thematic content analysis was applied to the case data of four Gauteng-based manufacturing SMEs (SMMEs), and summarised in a literature-developed, conceptual structure-risk framework. Results indicate that SCS does influence SCR. Investment in facility infrastructure and supplier relationships appear to be the most influential features. SCS also affects the operational and financial risk of an enterprise. These risks drive the SMEs’ strategy and reputation, and consequently drive the corresponding risk dimensions (i.e., strategic and reputation risks). These findings are limited, and should not be generalised to all South African SMEs.

INTERNATIONALIZATION AS A "WORK-AROUND" STRATEGY: HOW GOING ABROAD CAN HELP SMES OVERCOME LOCAL CONSTRAINTS

The economic environment and associated constraints have significant and unequal effects on Small and medium enterprises (SMEs). Constraints have been used, among other growth factors, to understand why some SMEs fail to grow while others foster. However, beyond knowing the effects or constraints, it is important entrepreneurs know how they can avoid constraints. The study provides an important contribution by showing that South-African SMEs that face constraints because of competition, government rules and regulations, financing gaps and corruption, can navigate away from these constraints by going international. The evidence shows a positive moderating effect of internationalization on the relationship between local constraints and SME growth. However, the results also reveal that lack of government support is a significant constraint to growth when SMEs export internationally.

Categorizing South African SMEs according to customer relationship building practices

It is becoming increasingly important for small and medium enterprises (SMEs) to build relationships with their customers. Relationship building is supported by collecting up to date information on the customer, the service rendered and the satisfaction with the product. Recent previous literature on customer relationship management seem to focus on how technology can assist with relationship building but there is a gap in the knowledge as to how South African SMEs go about building relationships and collecting feedback from customers. Quantitative self-administered online survey was sent to small business owners that are registered with an official state institution for SME’s in South Africa. Based on the results SMEs can be categorised as average presumers, passive respectors ordo-it-all-right’ers based on how they build relationships and collect feedback from customers.

Adoption of e-marketing tools by small and medium enterprises (SMEs) – fad or future trend?

E-marketing is considered as one of the fastest growing fields in e-business, which has the potential to become a platform for SMEs to compete with larger enterprises even though they may not have adequate infrastructure and resources. Over the years SMEs have struggled to compete on some sort of equal footing with larger organisations and with the advent of technology and the growth in the use of e-marketing, the playing field is becoming more equal. The literature on the use of e-marketing tools by SMEs in South Africa, however, is limited. The purpose of this paper was therefore to investigate the extent to which South African SMEs utilise e-marketing tools. The author feels that the findings will be universally applicable to SMEs in most countries. Through providing a clearer understanding of e-marketing and its use, this paper may assist SMEs and entrepreneurs to improve their existing marketing strategies. The study followed a quantitative research approach, whereby a self-administered questionnaire was distributed to SME owners. The results indicate that SMEs utilise e-marketing tools moderately and that the utilisation will increase in the future.

ICT Utilisation within Experienced South African Small and Medium Enterprises

AbstractThe aim of the study was to examine the levels and purposes of Information and Communication Technology (ICT) utilisation within a sample of ICT aware South African Small and Medium Enterprises (SMEs). It is globally acknowledged that SMEs are significant in their contributions to economic growth, job creation, innovation of new products, income generation, poverty alleviation, technological progress and competitive advantage. However, SMEs are characterised by limited ICT utilisation. More studies are required to understand the purposes and levels of ICT utilisation within the South African SMEs, as well as the effect of firm size and age on ICT utilisation. To address this issue, an online based survey was conducted, and evidence gathered showed the following. (1) ICT aware South African SMEs are high users of technology. (2) Levels of ICT utilisation by ICT aware South African SMEs is sector specific. (3) ICT aware South African SMEs used ICT for cost saving, to collaborate with new and existing business partners, to handle collaboration within the firm and communication with the firm's stakeholders, to establish relationships with other organisations, and to enable strategic planning. (4) A firm's size has significant impacts on the levels of ICT utilization. (5) A firm's age impacts on the level of ICT utilisation of ICT aware South African SMEs; the more mature firms had more advanced information technology capability. The paper offers insights into the levels and purposes of ICT utilisation with implications for practitioners and academics.

English

Unemployment is one of the pressing issues that attract more attention in South Africa at the moment, with over 25% of the population jobless and the number increases to 40% when including the people who have totally given up the search for work. The South African government has continuously highlighted that the SME sector will be the key to increasing job creation in the country. However, there is evidence that the sector is characterized by high failure rates and low success, growth and survival rates. It is therefore vital to develop a new and fresh perspective in addressing the challenges facing the sector and establish policies to foster job creation in the SME sector. Evidence from around the world show that the SME sector is always characterized by a small subset of high growth, high quality firms that account for the bulk of job creation in the sector. This paper provides a review on the literature of some key characteristics of the small subset of SMEs with high job creation potential, and further appraises the potential of fostering these actors in the South African SME sector. The paper culminates with some policy measures for enhancing high growth SMEs in South Africa as a means to address the job creation saga.   Key words: Unemployment, job creation, small and medium enterprises (SMEs).

Investigating the dynamic capabilities and competitive advantage of South African SMEs

This study investigates the dynamic capabilities (DCs) and competitive advantage of South African small and medium enterprises (SMEs). DCs are organisational processes purposefully designed to alter the “firm’s resource base” in other to achieve competitive advantage in a rapidly changing environment. DCs govern a firm’s “valuable, rare, inimitable and non-substitutable” organisational resources. Research has shown that South African SMEs contribute approximately 35% to the national gross domestic product. SMEs are significant in their contributions to economic growth, innovation of new products, technological progress and competitive advantage. However, most SMEs are confronted with challenges such as; changes in technologies, innovative products, customer demands, and the desire to remain flexible. SMEs are often faced with competitive forces which threaten their survival. The failure rate of SMEs is much higher than that of largerorganisations. South African SMEs fail at a rate of between 70 and 80%. SMEs need DCs to achieve competitive advantage in fast changing business environments. Research on DC has been on a piecemeal basis. An empirical research on SMEs’ DC from a developing countries context has not received wide attention. Through an online based survey of South African SMEs, our paper provides an insight into the types of organisational capabilities or DCs that can lead to competitive advantage within the SMEs. The statistical findings clarify the notion that DCs alone cannot lead to competitive advantage. It was found that sensing, integrative and behavioural capabilities are part of DC constructs: this study extends the used four DC constructs (absorptive, adaptive, innovative and networking capabilities) to include sensing, integrative and behavioural capabilities. The findings show DCs have significant impacts on competitive advantage, and are capable of influencing SMEs’ valuable, rare, inimitable and non-substitutable (VRIN) resources to achieve competitive advantage in a fast changing business environment.   Key words:  Competitive advantage, dynamic capability, small and medium enterprises.

SMEs marketing skills challenges in South Africa

SMEs comprise over 90% of African business operations and contribute to over 50% of African employment and GDP. SMEs sector has shown positive signs in South Africa, Mauritius and North Africa. In South Africa, SMEs constitute 55% of all jobs. Research such as Bowler, Dawood and Page (2006) and Phakisa (2009) reveal that 40% of new business ventures fail in their first year, 60% in their second year, and 90% in their first 10 years of existence. It seems that a number of challenges have been identified as contributing to the failure of SMEs in South Africa and worldwide. The research problem of this study emanates from the current high business failure rate as well as marketing skills of South African SME managers. The research investigates whether managerial marketing skills of small and medium enterprises (SMEs) contribute to high business failure rate in South Africa. The research established that lack of marketing skills of SMEs definitely contribute to high business failure rate in South Africa. The study concluded that the lack of marketing skills has a negative impact on the success of small businesses. The conclusion is that a positive correlation between lack of marketing skills and business failure exists in South Africa. The challenge is to improve the marketing skills of small business owners as small business is considered to be the panacea for South Africa’s unemployment problems.