Factors Affecting the Business Performance of Small Businesses in Sekhukhune
Keywords:
SMMEs, Owner’s Funds, Location of Business, Finance, Business Performance
Abstract
This study identifies the factors that affect the business performance of Small, Micro and Medium Enterprises (SMMEs) in the Sekhukhune District of the Limpopo Province in South Africa. The study collected data from a randomly selected sample of 200 SMMEs and used WARP PLS software to analyse data. The results indicated that five factors, namely “financeâ€, “characteristics of entrepreneursâ€, “location of businessâ€, “government supportâ€, as well as “products and services†were positively related to business performance. In contrast to other studies, this study found that owners’ personal funds and their proper management played a key role in the performance of businesses. This has a major implication for government support agencies that provide funding opportunities.
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References
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Garg, A. K. & Thobeng, C. (2015). The Adoption of Electronic Commerce by Small and Medium Enterprises in Pretoria East. The Electronic Journal of Information Systems in Developing Countries, 68(7), 1-23. Ghouri, A. M., Khan, N. V. R., Malik, M. A. & Razza, Q. A. (2011). Marketing practices and their effects on a firm’s performance: Findings from small and medium-sized catering and restaurants in Karachi. International Journal of Business and Management, 6(5), 251-259. Gupta, N. & Mirchandani, A. (2018). Investigating entrepreneurial success factors of women-owned SMEs in UAE. Management Decision, 56(1), 219-232. Gill, A. & Biger, N. (2012). Barriers to small business growth in Canada. Journal of Small Business and Enterprise Development, 19(4), 656-668. Harvie, C. & Lee, B. (2002). The Role of SMEs in National Economies in East Asia. Edward Elgar Publishing. USA. Hill, J. (2001). A multidimensional study of the key determinants of effective SME marketing activity. International Journal of Entrepreneurial Behaviour and Research, 7(5), 171-204. Islam, M. A., Keawchana, T. & Yusuf, D. H. M. (2011). Factors affecting business success of Small & Medium Enterprises (SMEs) in Thailand. Asian Social Science, 7(5), 180-190. Islam, M. D. A, Khan, M. A, Obaidullah, A. B. Z. & Alam, M. S. (2011). Effects of entrepreneur and firm characteristics on the business success of Small and Medium Enterprises (SMEs) in Bangladesh. International Journal of Business and Management, 6(3), 289-299. Jones, E. (2016). SMEs struggle for survival in South Africa CNBS AFRICA (ONLINE). Jones, N., Borgman, R. & Ulusoy, E. (2015). Impact of social media on small businesses. Journal of Small Businesses and Enterprise Development, 22(4), 611-622. Kadam, A. & Ayarekar, S. (2014). Impact of social media on entrepreneurship and entrepreneurial performance: Special reference to Small and Medium-scale enterprises. Journal of Management, 10(1), 1-11. Karakaya, F. (2002). Barriers to entry in industrial markets. Journal of Business and Marketing, 17(5), 379388. Kritikos, A. S. (2007). Is Entrepreneurship Success Predictable? An Ex-Ante Analysis of the Character-Based Approach. [Discussion Paper: 2687]; available from [email protected]. Kiggundu, M. N. (2002). Entrepreneurs and entrepreneurship in Africa: what is known and what needs to be done. Journal of Development Entrepreneurship, 7(3), 239-258. International Labour Organisation (ILO) News. (2017). Sluggish SME development hurts jobs and the economy; available from http://www.ilo.org/global/about-the-ilo/newsroom/ news/WCMS_579872/lang--en/index.htm. Ladzani, L. & Netswera, G. (2009). Support for rural small businesses in Limpopo Province, South Africa. Development Southern Africa, 26(2), 225-239. Ladzani, W. (2010). Historical perspective of small business development initiatives in South Africa with special reference to Limpopo Province. Problems and Perspective in Management, 8(3), 68-79. Ladzani, M. W. & Van Vuuren, J. J. (2002). Entrepreneurship training for emerging SMEs in South Africa. Journal of Small Business Management, 40(2), 153-160. Leopoulos, V. N., Kirytopoulos, K. A. & Malandrakis, C. (2006). Risk Management for SMEs: Tools to use and how. Journal of Production Planning and Control, 17(3), 322-332. Ligthelm, A. A. (2010). Entrepreneurship and Small Business Sustainability. Southern African Business Review, 14(3), 131-153. Limpopo Business Support Agency (LIBSA). (2011). Annual Report. Polokwane: LIBSA. Longley, R. (2006). Small business drives US economy, provide jobs for over half of nation’s private workforce; available fromhttp://usgovinfo.about.com/od/smallbusiness/a/ sbadrives.htm. [Accessed on 25th April 2018]. Mambula, C. (2002). Perceptions of SMEs growth constraints in Nigeria. Journal of Small Business Management, 40(1), 58-65. Mbonyane, B. & Ladzani, W. (2011). Factors that hinder the growth of small businesses in South African townships. European Business Review, 23(6), 550-560. McCartan-Quinn, D. & Carson, D. (2003). Issues which impact upon marketing in the small firm. Small Business Economics, 21(2), 201-213. Moy, J., & Luk, V. W. M. (2003). The life cycle model as a framework for understanding barriers to SME growth in Hong Kong. Asia Pacific Review, 10(2), 199-220.
Neneh, N. B. & Van Zyl, J. (2012). Towards establishing long-term surviving Small and Medium Enterprises (SMEs) in South Africa: An Entrepreneurial Approach. African Journal of Business Management, 6(28), 8327-8343. Neumark, D. Wall, B. & Zhang, J. (2008). Just the fact. Small business and job creation: Do Small businesses create jobs? Public Policy Institute of California; available fromhttp://www.ppic.org. Omri, A., Frikha, M. A. & Bouraoui, M. A. (2015). An empirical investigation of factors affecting small business success. Journal of Management Development, 34(9), 1073-1093. Okpara, J. O. (2011). Factors constraining the growth and survival of SMEs in Nigeria. Management Research Review, 34(2), 156-171. Okpara, J. O. & Wynn, P. (2007). Determinants of small business growth constraints in a sub-Saharan African economy. SAM Advanced Management Journal, 72(2), 24. Orobia, L. A. & Byabasha, W. (2013). How do small business owners manage working capital in an emerging economy? Qualitative Research in Accounting and Management, 10(2), 127-143. Pansiri, J. & Temtime, Z. T. (2010). Linking firm and manager’s characteristics to perceived critical success factors for innovative entrepreneurial support. Journal of Small Business and Enterprise Development, 17(1), 45-59. Peng, M. W. & Luo, Y. (2000). Managerial ties and firm performance in a transition economy: The nature of a micro-macro link. Journal of Academy of Management, 43(3), 486-501. Perks, S. & Austin, G. D. (2013). Exploring business growth aspirations and strategic planning of hairdressing salons in South Africa. Integrative Business & Economics, 2(1), 319-332. Rantso, T. A. (2016). Factors affecting performance/success of small scale-rural non-farm enterprises in Lesotho: Journal of Enterprising Communities: People and Places in the Global Economy, 10(3), 226248. Rogerson, C. M. (2000). Successful SMEs in South Africa: the case of clothing producers in the Witwatersrand. Development Southern Africa, 17(5), 687-716. Rogerson, C. M. (2008). Tracking SMME development in South Africa: Issues of finance, training and the regulatory environment. Urban Forum, 19, 61-81. Shane, S. & Cable, D. (2002). Network ties, reputation, and the financing of new ventures: Journal of Management Science, 48(3), 364-381. South Africa. (1996). National small business Act, 102.Sriram, V. & Mersha, T. (2010). Stimulating entrepreneurship in Africa. World Journal of Entrepreneurship, Management and Sustainable Development, 6(4), 257-272. Stokes, D. & Blackburn, R. (2002). Learning the hard way: the lessons of owner-manager who have closed their businesses. Journal of Small Business and Enterprise Development, 9(1), 17-27. Swierczek, F. W. & HA, T. T. (2003). Entrepreneurial orientation, uncertainty avoidance and firm performance: An analysis of Thai and Vietnamese SMEs. Entrepreneurship and Innovation, 4(1), 4658. Thornhill, S. & Amit, R. (2003). Learning About Failure: Bankruptcy, Firm Age, and the Resource-Based View. Organisation Science, 14(5), 497-509. Tuan, N. P. & Yoshi, T. (2009). Factors contributing to the growth of Small and Medium Enterprises: An empirical analysis of Vietnam’s manufacturing firms. Management Review, 31(2), 35-51. Unger, J. M., Keith, N., Hilling, C., Gielnik, M. M. & Frese, M. (2009). Deliberate practice among South African small business owners: Relationships with education, cognitive ability, knowledge, and success. Journal of Occupational and Organisational Psychology, 82, 21-44. Van Scheers, L. (2010). Challenges of small groceries shops in South Africa. World Journal of Entrepreneurship, Management and Sustainable Development, 6(3), 221-231. Young, L., Schaffers, L. & Bruwer, J. P. (2012). South African informal businesses sustainability in the Cape Town Central Business District: The power of internal financial controls. African Journal of Business Management, 6(45), 11321-11326. Yusuf, J. E. (2014). Impact of start-up support through guided preparation. Journal of Entrepreneurship and Public Policy, 3(1), 72-95. Zhu, Y., Wittman, X. & Peng, M. W. (2012). Institution-based barriers to innovation in SMEs in China. Asia Pacific Journal of Management, 29, 1131-1142.
Published
2018-09-14
How to Cite
Garg, A. K., & Phaahla, P. N. (2018). Factors Affecting the Business Performance of Small Businesses in Sekhukhune. Journal of Economics and Behavioral Studies, 10(4(J), 54-67. https://doi.org/10.22610/jebs.v10i4(J).2407
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Research Paper
Copyright (c) 2018 Ajay K Garg, Phillip NT Phaahla
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