Juan-Pierré BRUWER Judith SMITH

The Sustainability of Newly Established Business Entities: The Sustenance Framework

Small businesses are often described as the lifeblood of economies around the globe. This is mainly due to small business’ significant socio-economic value-adding abilities. These entities significantly contribute to national Gross Domestic Products, while both disseminating wealth and alleviating poverty through the creation of employment opportunities. Research suggests that small businesses have high failure rates - most failing after operating for between three and five years. Instead of emphasising particular reasons why small businesses fail, the emphasis was placed on two theories, namely the liability of newness (specifically that small businesses have little to no reputation when they are newly established) and the neo-institutional theory (specifically that small businesses tend to imitate “best practices” of established businesses, as-is, without considering customized solutions using a “trial-and-error” approach). In particular, the primary objective of this paper was to conceptualise how the Sustenance framework addresses issues contained within these two theories to, ultimately, enhance the sustainability of small businesses. This conceptual paper was exploratory and constituted qualitative research. From the observations made, it appears that the Sustenance framework can assist with the building of small businesses’ reputation while limiting the adverse influence of mimetic isomorphism.
JEL Classification L20, M10, M20
Full Article

1. Introduction

Small businesses are of paramount importance to the economies of countries’ around the world (Wiklund and Shepherd, 2005). Small businesses can take on the form of micro enterprises, small enterprises and medium enterprises – often abbreviated as MSMEs, SMMEs, or SMEs (Bruwer, 2016). Before expanding on the latter, it should be noted that the term “small business” has various definitions. Based on the work of Hollander, small businesses are “those enterprises, which are involved in all or most of ... business functions and decisions ... which do not exceed a [certain] size which, concerning the nature of the business, permits personalized management by one or few executives” (Hollander, 1967). In turn, Street and Cameron define a small business as “an independently owned and operated enterprise that is not dominant in its field or industry ... which has relatively fewer resources than other companies in its markets” (Street and Cameron, 2007). From these definitions, the inference can be made that a small business is a privately owned entity, which can operate in various industries while being owned and/or managed by at least one natural person.

Small businesses are also directly associated with the discipline of entrepreneurship; as built on the creative response theory. The discipline of entrepreneurship is defined as the study surrounding “the creation of new business enterprises by individuals ... with the entrepreneur assuming the role of society’s major agent of change, initiating the industrial progress that leads to wider cultural shifts” (Kent et al., 1982). Moreover the creative response theory, as developed by the economist and political scientist, Joseph Schumpeter in 1947 (Bruwer and Van Den Berg, 2017), suggested that innovation is critical “whenever the economy ... do[es] something else, something that is outside of the range of existing practice, we may speak of creative response ... [it] changes social and economic situations for good ... it creates situations for which there is no bridge to those situations that might have emerged in its absence ... and [it is] coterminous with a study of entrepreneurship” (Schumpeter, 1947). To this end, it becomes apparent that small businesses, through the power of innovation, have the potential to make a significant socio-economic impact in the areas in which they operate.

To place the above inferences in perspective, since the start of 2010, globally, small businesses have been reported to make up at least 90% of all businesses in operation (Hayder and Lussier, 2016; Rikhardsson and Dull, 2016; Sellitto et al., 2016; Ward and Rhodes, 2014). Using the foregoing as a basis, it is not surprising that small businesses have been reported to contribute significant socio-economic value to the national economies in which they operate; including inter alia contributing to national Gross Domestic Products (GDP), assisting with the equal dissemination of wealth and the alleviation of poverty (Bruwer and Vand Den Berg, 2017; Turyakira et al., 2019). In core, the International Monetary Fund estimates the most recent global GDP at US$80.935 trillion (IMF, 2020); research suggests that small businesses are responsible for contributing at least 33% of this amount (Williams and Horodnic, 2016). In terms of employment, research shows that small businesses are responsible for 70% of global employment opportunities created (Jimenez et al., 2020). Notwithstanding the aforementioned, small businesses around the world suffer from high failure rates (Ayandibu et al., 2019). This view is substantiated by small business failure statistics for a few countries evident in Table 1 below.

Table 1. Small Business Failure Rates (prior to COVID19).

Country Failure rate Source
Canada More than 66.67% within their
first 10 years of operation.
Le and Needham (2019)
China Approximately 50% within their
first five years of operation
Sidek et al. (2019)
India More than 90% within their
first three years of operation.
Kumar (2019)
New Zealand Approximately 50% within their
first five years of operation
Ward (2020)
South Africa Approximately 75% within their
first three years of operation.
Bruwer et al. (2020)
United States of America Approximately 90% within their
first five years of operation.
Mukherjee and Hollenbaugh (2019)
European Union countries Approximately 50% within their
first five years of operation.
European Union (2007)

The statistics in Table 1 above speak to the observation that almost all newly established small businesses, on average, have an expected lifespan that ranges between three years and five years before they fail (Mabunda and Chinomona, 2019; Makwi, 2019). Over the years, reasons for the high small business failure rate have been pinned on internal factors (Internal factors are those factors that are within the control of management to manage (Franco and Haase, 2010), for example, lack of basic business skills, lack of financing, and having limited resources) and external factors (External factors are those factors that are not within the control of management to manage (Franco and Haase, 2010), for example supply and demand, harsh economic environments (the term “economic environment” refers to the overall well-being of a country’s economy (Guilhoto et al., 2002)), volatile interest rates, crime, taxation, protests, and changes in legislation) (Denton, 2020; Karanovic et al., 2019; Masama and Bruwer, 2018; Akaeze and Akaeze , 2017; Crutzen, 2010). Prior research suggests that although small businesses are affected by similar external factors, it is internal factors that most adversely affect their sustainability (Li and Zheng, 2017; Kennedy et al., 2006). For the sake of clarity, the term sustainability pertains to a business’ ability to meet responsibilities for its people (its stakeholders), the planet (the environments which it affect), and its profit (the attainment of economic objectives) (Beattie, 2019; Spiliakos, 2019; Bruwer and Coetzee, 2016).

Regardless of the foregoing, almost nothing has improved in terms of small business failure rates over the past two decades (Amankwah et al., 2019). Two prominent aspects for the latter dispensation, as contained in two theories, may be the reason why small business failure rates have not improved. First, newly established small businesses generally have a limited reputation (related to trust and loyalty), due to inherent limitations. Because of the latter, it makes matters difficult for newly established small businesses to conduct business and become sustainable (the liability of newness). Lastly, small businesses tend to undergo isomorphic change to become like other established businesses. Among the change small businesses undergo is that of mimetic isomorphic change – small businesses generally adopt a copy-and-paste approach by implementing “best practices” from at least one established business, as-is, to perform relevant business operations without testing its feasibility (the neo-institutional theory).

Stemming from the above, two questions arise, namely 1) “How can newly established small businesses build their reputation despite their inherent limitations?”, and 2) “How can small businesses limit the adverse influence from copying-and-pasting best practices without testing their feasibility?”. Particularly for this study, the primary aim was to ascertain whether the two prominent aspects contained in the two theories can be addressed by a newly developed framework, namely the Sustenance Framework, at least in a theoretical dispensation.

The Sustenance Framework comprises six inter-related steps – “Foundation”, “Pillars”, “Radar”, “Control”, “Sharing” and “Reviewing” – that assist small businesses with step-by-step guidance to fortify their sustainability (Bruwer, 2021). Essentially, if small business sustainability can be enhanced, it may lead to added socio-economic value to be generated in economies around the globe – allowing for the reduction of unemployment, the dissemination of wealth, and the eradication of poverty.

For the remainder of this paper, relevant discussions take place under key headings. First, the research design followed in this study is covered after which the theoretical framework of this study is provided. Here, discussions cover the liability of newness, the neo-institutional theory, as well as the Sustenance Framework. Afterwards, the theoretical framework is discussed in depth to address the primary aim of the study, from where it is concluded. In the conclusion, propositions for further empirical testing are provided.

2. Research Design

This study was exploratory as it pertained to the exploration of new ideas and insights on which little and/or no prior research has been conducted (Leedy and Ormrod, 2010; Collis and Hussey, 2009). Moreover, this study was nascent as the primary aim of this study is synonymous with “topics [that] have attracted little research or formal theorizing to date ... they [are] represent[ative of] net phenomena in the world (Cristofaro, 2020; Edmondson and McManus, 2007).

Furthermore, this study took on the form of a conceptual paper; defined as “a paper which [contains] content [that] is mostly discursive and develop[s] hypotheses based on comparative studies or others’ work of previous studies” (Mulatiningsih, 2017). One of the biggest pros of a conceptual paper is its “focus on integration and proposing new relationships among constructs” (Gilson and Goldberg, 2015). Notwithstanding the latter, such papers should ideally take on a problem-based-focus that contains fresh perspectives (with identified relationships between theories and/or phenomena) while still having relevance (Cropanzano, 2009). Despite the pros of conceptual papers, a major limitation of a conceptual paper is the aspect of generalisability – the pragmatic usefulness of findings in specific environments (Hubbard et al., 1998). If properly addressed, however, generalisability may open up avenues for further research, be it empirical or non-empirical (Hanafizadeh et al., 2020).

Since the primary aim of this study was to conceptualise how the Sustenance Framework can address two prominent aspects contained in two theories to, in turn, enhance small business sustainability, while also considering the fact that this study was exploratory, a conceptual paper best suited this study‘s research design. Throughout this study, how literature was sourced was through means of searching academic databases for keywords – separately and/or combined – such as “neo-institutional theory”, “small business”, “newly established small business”, “small businesses”, “sustainability”, and “liability of newness”. In core, this research study serves as a foundation for future empirical research to be conducted in the sense that evidence was provided on the theoretical feasibility of using the Sustenance Framework to address the sustainability concerns of newly developed small business entities.

3. Conceptual Framework

For the remainder of this section, relevant discussion takes place under the following three sub-headings: 1) liability of newness, 2) neo-institutional theory, and 3) the Sustenance Framework.

3.1. Liability of Newness

During the course of the mid-1960s, the liability of newness was developed by Arthur Stinchcombe (Abatecola et al., 2012). This phenomenon pertains to the observation that newly established business entities have a higher tendency to fail when compared to established business entities (Soto-Simeone. 2020). The latter is primarily attributable due to newly established businesses having: 1) limited existing and/or potential clients, 2) limited resources (e.g. human resources, financial resources and physical resources) on hand, 3) diverse internal stakeholders with different views when compared to the vision, and 4) to develop and implement new roles and tasks (Josefy et al., 2017; Odell and Spielman, 2009). The foregoing, in turn, directly affects a business’ reputation - comprising loyalty and trust (Ettenson and Knowles, 2008; Yoon et al., 1993) – and ultimately the manner in which the business achieves its relevant objectives (Lines, 2004; Gambetta, 1998).

According to recent studies (Partanen and Goel, 2017; Parente et al., 2015) small businesses are, by default, often perceived as not-credible and non-reputable. Reasons for the latter dispensation pertain to small businesses not always being creditworthy, not always possessing trusting entrepreneurial traits such as resilience (O’Toole and Ciuchta, 2019; Korber and McNaughton, 2018), and having little or no track record [portfolio] of work that has been successfully completed on behalf of its clients (Winborg, 2015). Another prevailing reason as to why small businesses are negatively perceived is due to their high failure rate – the longer a small business exist, the better the perception associated with the small business becomes (Dele-Ijagbulu et al., 2020; Prieto et al., 2020).

To this end, it becomes apparent that apart from facing “standard” internal factors and external factors, small businesses are disadvantaged due to the negative perceptions coupled to them. In the same vein, it also becomes apparent that if small businesses can remain in operation for an extended period of time, they will be perceived as better credible and better reputable.

3.2. Neo-Institutional Theory

In the early-1980s Paul DiMaggio and Walter Powell developed the neo-institutional theory (DiMaggio and Powell, 1983). This theory holds relevance to the observation that every business entity, though unique, undergoes change to become like other business entities while being influenced by similar external forces (Suddaby, 2010; Hu et al., 2007). This change comprises three stages of isomorphism, namely: 1) normative isomorphism (brought about by professional standards and/or networks, for example, accountants, lawyers, doctors, engineers and architects), coercive isomorphism (brought about by institutions on which business entities directly and/or indirectly rely on, for example, government departments, government agencies, and community agencies), and 3) mimetic isomorphism (brought about by uncertainty and/or desire, for example, trends set by established business entities, and practices instilled by competitors) (Benders et al., 2006; Haveman, 1993).

Among the three isomorphic changes, business entities undergo, newly established business entities are more susceptible to mimetic isomorphism (Lehner and Harrer, 2019; Haunschild and Miner, 1997). This view is supported by at least one study where it was found that newly established business entities imitate “best practices” as instilled by established/successful business entities rather than following a “trial-and-error” approach (Mähönen, 2020).

With small business management generally managing from the top-down (Spady and Clark, 1989; Fayol, 1937), is it not surprising that stakeholders rely on management to give guidance by setting a clear “tone at the top” (Ramutsheli and Janse van Rensburg, 2015). Such guidance directly affects business’ ability to achieve its relevant objectives (Edwards, 2018; Mbalamula et al., 2017; Heames, 2010; Yoo et al., 2006Wren et al., 2002). Considering that a business is a vivid and clear reflection of its management (Bruwer and Coetzee, 2018; Bruwer, 2016; Gerber, 1995), while keeping in mind that many small businesses reply on a “copy-and-paste approach” surrounding best practices, it becomes evident that such an approach may result in the business losing its identification; leading it to fail.

According to recent studies (Kesore, 2020; Lévesque and Shepherd, 2004) small businesses, world-wide, actively copy-and-paste selected practices and procedures from established businesses without considering it influence on operations. Probable reasons as to why small businesses do so include the increasing of its competitive edge (Cooper and Crowther, 2008), the modernisation of its operations (Sebestyén, 2016; Csaszar and Siggelkow, 2010), and the reduction of uncertainty caused by crises (Kern, 2013). Considering the fact that business processes and business practices of established businesses are customized to achieve their relevant objectives (Parthasarathy and Sharma, 2014), it is almost certain that a copy-and-paste approach adopted by small businesses will result in failure. This view is supported by Csaszar and Siggelkow through the following direct quote: “As firms copy more practices [and procedures] from each other, strategic convergence ensues, decreasing differentiation among firms, increasing competition, and consequently leading to profit erosion ... while held up in the industry as “key success factors” [it] may not be economically viable” (Csaszar and Siggelkow, 2010).

3.3. The Sustenance Framework

Using the above as a foundation, it is not surprising that international studies found that: 1) newly established businesses are often perceived as not-credible or non-reputable (Partanen and Goel, 2017; Parente et al., 2015), and 2) globally, small businesses are actively copying selected practices from established businesses without considering their fit in their own operations (Kesore, 2020; Cooper and Crowther, 2008; Lévesque and Shepherd, 2004). Considering that these prominent aspects highlighted above are current realities in small businesses, further exploration on how to mitigate their adverse influence on small business sustainability is justified; one of which is the Sustenance Framework.

The Sustenance Framework was developed by Juan-Pierré Bruwer during 2020 in an attempt to provide reasonable assurance to small business management surrounding the attainment of objectives (Bruwer, 2021). The Sustenance Framework was developed after discovering one major inherent limitation in the Committee of Sponsoring Organisations (COSO) Integrated Internal Control Framework (Bruwer, 2020), namely that there is no measurement tool to ascertain the “tone at the top” in a business entity.

This inherent limitation was investigated by making use of the first two steps of the Control Legacy-K (CLK) Framework (Bruwer, 2016); later becoming the Foundation of the Sustenance Framework. Specifically, the first two steps of the CLK Framework was found to adequately cover the definition of the control environment – better known as the “tone of the top” set by management (Bruwer et al., 2019). Considering that a business is a vivid and clear reflection of its management (Gerber, 1995), it is not surprising that the “tone at the top”, as set by management, serves as the foundation of any system of internal control (COSO, 2013). A system of internal control is defined as a comprehensive system, consisting of various elements, that provides management with reasonable assurance surrounding the attainment of a business entity’s objectives in the foreseeable future (Spira and Page, 2003).

The Sustenance Framework, a newly developed internal control framework, guides small business management, in a step-by-step approach, to ascertain:

  • Why the business exists and how the business is managed (Foundation).
  • What the business’ objectives are (Pillars).
  • What imminent risks the business faces to achieve its objectives (Radar).
  • How these risks will be prevented and detected (Control).
  • How the above information needs to be communicated with stakeholders (Sharing).
  • When the entire process needs to be reviewed (Reviewing).

Though this Framework is related to the COSO Integrated Internal Control Framework, the Sustenance Framework is more feasible for small businesses due to the manner in which the “tone at the top” can be assessed, while also providing hands-on guidance on how to establish a system of internal control (Bruwer, 2021; Bruwer, 2020). In quintessence, considering the latter, the Sustenance Framework may be suitable to assist small businesses to build their reputation, while simultaneously addressing the copy-and-paste pitfall of mimetic isomorphic change. The Sustenance Framework is depicted in Figure 1, after which each of its components is discussed in more depth.

The Sustenance Framework

Figure 1. The Sustenance Framework

Source: Bruwer (2021).

Foundation: This is the first component of the Sustenance Framework. Here, the emphasis is placed on understanding the nature of the business (for example, the industry(ies) in which it operates, the location(s) where it operates, and the markets which it serves), as well as the managerial conduct (for example, the core values of management, and the manner in which management manages). In core, the bigger picture for starting the business is gleaned, as well as how business operations take place; as influenced by the managerial conduct of management.

Pillars: The second component builds on the Foundation as it entails the development of relevant objectives. This includes strategic objectives (for example, vision and mission), including business objectives (for example, operational objectives, reporting objectives, social objectives, and compliance objectives).

Radar: Following suit, this component builds forth on the Pillars. Here, relevant risks which may hamper the attainment of relevant strategic objectives and business objectives are first identified, and then assessed in terms of frequency and potential impact. 

Control: With the Radar in place, the next component allows for the mitigation of risks that were identified and assessed. This takes place through risk management initiatives (for example, sharing, avoiding, and accepting) and the implementation of proper internal control activities (for example, preventive controls, detective controls, and corrective controls).

Sharing: With the “blueprint” in place - stemming from the previous four components - relevant information can be communicated with internal stakeholders and/or external stakeholders. Such communication needs to take place to allow relevant stakeholders to perform applicable tasks to, in turn, contribute towards the attainment of strategic objectives and business objectives.

Reviewing: Periodically, it is recommended that every component of the Sustenance Framework is reviewed. This is especially the case in events where, inter alia, the business expands, objectives are achieved, and new management comes on board.

Notwithstanding the above, it is worth noting that, over the years, researchers have investigated how managers can best execute their controlling-function (Griffin, 2013). The four functions of management pertain to the planning-function, organising-function, directing-function, and controlling-function (Griffin, 2013). In quintessence, this function has to do with the manner in how management maintains, improves and monitors business processes to provide reasonable assurance regarding the attainment of objectives in the foreseeable future (Schermerhorn, 2013). The controlling-function of management is by no means an easy task to execute, especially considering that limited principles are attached to it (Koontz, 1959). More often than not these principles pertain to characteristics of good corporate governance which include that of discipline, transparency, independence, accountability, responsibility and fairness (Idowu et al., 2015; Njegomir and Tepavac, 2014)

Therefore, it is not surprising that a primary challenge of properly executing the control-function has to do with the controlling of people (i.e. internal stakeholders) who, in turn, may affect the efficiency of business processes, as well as the reputation of a business entity; directly or indirectly (Dolphin, 2004; Louisot, 2004). This better explains the need for internal control systems, especially since they have been found to curb both reputational risks and operational risks in established business entities (Gatzert and Schmt, 2020; D’Aquila and Hournes, 2014; Soin and Collier, 2013).

4. Discussion

The importance of small businesses, to economies around the world, rest in the significant socio-economic value they add (Turyakira et al., 2019; Bruwer and Van Den Berg, 2017; Wiklund and Shepherd, 2005). Essentially, the socio-economic value added by these businesses, to the global GDP, is estimated at US$26.71 trillion (IMF, 2020); simultaneously providing employment opportunities that are equivalent to 70% of all employment opportunities worldwide (Jimenez et al., 2020). Notwithstanding the foregoing, unfortunately, small businesses have been found to suffer from high failure rates - a great proportion failing between three and five years (Mabunda and Chinomona, 2019; Makwi, 2019).

In China, New-Zealand and European countries, 50% of small businesses have been found to fail within their first five years of existence (Ward, 2020; Sidek et al., 2019); 75% small businesses in South Africa have been found to fail within their first three years of existence (Bruwer et al., 2020). In turn, 66.67% of Canadian small businesses fail after their first 10 years of operation (Le and Needham, 2019); 90% of Indian small businesses fail after their first three years of operation (Kumar, 2019); 90% of small businesses in the United States of America fail after their first five years of operation (Mukherjee and Hollenbaugh, 2019). These high failure rates, as reported on before COVID19 (Perold et al., 2020), have not improved notably over the past two decades (Amankwah-Amoah et al., 2019), though they are constantly blamed on harsh economic environments (Akaeze and Akaeze, 2017) that have their own subsequent economic factors and political factors (Denton, 2020; Karanovic et al., 2019; Masama and Bruwer, 2018; Crutzen, 2010). Therefore, the focus was shifted to two theories to better understand the high small business failure rates, namely the liability of newness, and the neo-institutional theory.

When placing emphasis on the liability of newness, the notion exists that small businesses fail due to having limited reputation (comprising loyalty and trust) (Ettenson and Knowles, 2008; Lines, 2004; Gambetta, 1998; Yoon et al., 1993). The latter may stem from small businesses having: 1) limited clients (potential and/or existing), 2) limited resources on hand, 3) diverse internal stakeholders with differing views, and 4) new roles and/or tasks that have to be implemented (Josefy et al., 2017; Odell and Spielman, 2009). Then, based on the neo-institutional theory, small businesses strive to become like established businesses while operating in similar conditions (for example, harsh economic environments with their applicable economic factors and political factors) (Suddaby, 2010; Hu et al., 2007). To become like established businesses, small businesses undergo isomorphic change (Benders et al., 2006; Haveman, 1993) which are, more often than not, aligned towards mimetic isomorphism (Lehner and Harrer, 2019; Haunschild and Miner, 1997). Alternatively stated, small businesses appear to imitate “best practices” by established businesses, as-is (copy-and-paste), without considering customized solutions using a “trial-and-error” approach (Mähönen, 2020).

Using the above as a basis, from the two theories, it becomes apparent that two pertinent aspects contribute towards small business failure rates, namely: 1) small businesses generally have limited reputation as they have not established sufficient loyalty and trust with stakeholders, and 2) in order for small businesses to perform their operations, most choose to adopt a copy-and-paste approach by implementing “best practices” from at least one established business without considering whether they are suitable fits. Reverting to the controlling function of management, it should be noted that it includes the controlling of internal stakeholders – people with feelings, thoughts and ambition (Koontz, 1959). Though it is not possible to specifically measure (or manage) principles such as discipline, transparency, independence, accountability, responsibility and fairness (Idowu et al., 2015; Njegomir and Tepavac, 2014), internal stakeholders of a business entity will, most likely, always influence the efficiency of business processes, including its reputation (Dolphin, 2004; Louisot, 2004). Therefore, to address the two identified aspects of limited reputation and “copying-and-pasting” practices, the Sustenance Framework is suggested (Bruwer 2021; Bruwer, 2020).

The aspect of limited reputation may be addressed through ascertaining the bigger picture as to why the business was started (nature of the business) and how the business is managed (managerial conduct), as well as what the business strives to achieve (strategic objectives, and business objectives). With all of the latter phenomena in alignment, small businesses will be able to better convince a prospective client(s) to do business with them – related to the characteristics of transparency, and integrity. In turn, the aspect of “copying-and-pasting” may be addressed by the same phenomena mentioned above (nature of the business, managerial conduct, strategic objectives, and business objectives) as small businesses form their own unique identity by understanding why they were started, how it is managed, and what it wants to achieve.

Using the above as a basis, the envisioned result of using the Sustenance Framework include that clear direction will be provided to small business management (and relevant stakeholders) about, inter alia, expectations, objectives, managerial conduct, risks affecting the objectives, and controls that combat risks. Moreover, particularly amidst (and after) COVID-19, the Sustenance Framework may prove useful to business entities, especially existing small businesses, that need restructuring (e.g. change of objectives, operations and/or managerial operating styles) to better accommodate for change.

5. Conclusion

Worldwide, small businesses are of paramount socio-economic importance. Not only do these businesses contribute towards national GDPs; they also assist in the alleviation of poverty and the dissemination of wealth through the creation of employment opportunities. Unfortunately, the failure rate of small businesses leaves much to be desired as a large proportion fails after being in existence for between three and five years. Though research suggests that harsh economic environments, and subsequent economic- and political factors are to blame for the latter dispensation, these same reasons are still applicable nearly two decades after being first identified.

To this end, in this conceptual paper, two theories were discussed, namely the liability of newness, and the neo-institutional theory. In quintessence, these two theories give rise to pertinent aspects that may contribute towards high small business failure rates, namely: 1) small businesses generally have limited reputation, and 2) for small businesses to perform their operations, most choose to adopt a copy-and-paste approach by implementing “best practices” from at least one established business, as-is. These observations were justified by studies where it was found that small businesses, by default, are often perceived as not-credible and non-reputable (due to not being creditworthy, not possessing trusting entrepreneurial traits, having little or no track record of completed work, and their high failure rates), and small businesses worldwide blatantly copy-and-paste practices and processes from established businesses (to have a competitive edge, to modernize operations, and to overcome uncertainties) without considering their fit.

Using the above as a basis, it became apparent that small businesses: 1) could decrease the liability of newness by remaining in operation for an extended period of time, and 2) require their own unique practices and processes that speak to the achievement of their relevant objectives. The latter can be addressed by implementing the Sustenance Framework. In layperson’s terms, this framework provides clear direction to small business management on expectations, customized objectives that should be achieved, and how these customized objectives should be achieved. In turn, this framework allows for the building of a sound reputation while limiting the adverse influence of mimetic isomorphism.

Although the Sustenance Framework has not yet been empirically tested, it may have both theoretical implications and practical implications when implemented in small businesses. Theoretically, the Sustenance Framework may become a viable tool to address the pitfalls of the liability of newness and mimetic isomorphism (as contained in the neo-institutional theory). In a practical dispensation, the Sustenance Framework may [will] allow small businesses to develop customized objectives which can be achieved through customized business process and business practices which, in turn, can allow them to remain in operation for the foreseeable future. In addition to the above, small businesses that have already started their operations can make use of the Sustenance Framework to re-evaluate the nature of their business, especially in relation to the viability and feasibility of offering particular products and/or services amidst (and post) COVID-19.

In fundamental nature, from the theoretical evidence provided the Sustenance Framework, if used by newly established small businesses, may enhance their sustainability, while also addressing the aspect of limited reputation and the aspect of “copying-and-pasting” of business practices. To better understand the feasibility of the Sustenance Framework, in an empirical dispensation, further research is suggested on, inter alia, the influence of the Sustenance Framework on small business reputation-building, and the influence of the Sustenance Framework on the attainment of economic objectives.

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Juan-Pierré BRUWER
Business Re-Solution, South Africa

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Judith Smith Development Services, South Africa