Despite the contributions South African Small, Medium and Micro Enterprises (SMMEs) make to the national economy, they have among the highest failure rates in the world. Though various factors contribute to their high failure rate, one factor has not been considered, namely the potential lack of governance. Governance is seldom researched in a South African SMME dispensation, rendering it a nascent research topic. Hence, this study aimed to determine the influence the “tone at the top” had on the economic sustainability of sampled South African SMMEs. The research study was empirical, exploratory and took the form of survey research. A quantitative research methodology was and data were collected through self-administered questionnaires from 123 South African SMME owners/managers and 82 South African SMME employees. All respondents had to adhere to relevant sets of delineation criteria. Stemming from the results, out of all tested attributes of management, seven overlapping attributes...
Category - Juan-Pierré BRUWER
Cape Peninsula University of Technology, Cape Town, South Africa, ORCID: 0000-0003-0879-2519
This study was conducted to determine the influence that internal control systems of South African (fast-moving consumer goods) SMMEs have on their economic sustainability. Both empirical research and, descriptive research were conducted that were of a quantitative nature. The study relied on survey research and primary data were collected from 99 South African fast-moving consumer goods SMME owners/managers using a mixture of non-probability sampling methods. From the research conducted, it was found that the internal control systems of South African SMMEs were developed using non-SMME-specific internal control frameworks. Even though the internal control systems of sampled South African SMMEs were perceived to be both adequate and effective by their owners/managers, they were found to adversely influence the economic sustainability of these business entities. This research study justifies the need for South African SMMEs to develop internal control systems using SMME-specific...
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...
COVID-19 has brought about significant change in a global dispensation. One of these changes is the catalysed use of fourth industrial revolution interventions 4IRI. In South Africa, among the industries that have been influenced by the catalysed use of 4IRI is that of the Higher Education industry. Apart from the fact that South African Higher Education Institutions (HEIs) were restructured during the mid-2000s (e.g. Technikons transforming to Universities of Technology), most curricula and/or teaching practices are still outdated; do not accommodate for the development of 21st-century skills. To this end, this study was conducted to theoretically investigate whether the catalysed use of 4IRI, as brought on by COVID-19, influenced the efficacy of South African HEIs. This study was exploratory in nature and constituted online desktop research. Stemming from the research conducted, it appears that the catalysed use of 4IRI in South African HEIs may not have any influence on its...
During the mid-1990s the South African government formally recognised Small, Medium and Micro Enterprises (SMMEs) operating in the country, for the first time, through the publication of the National Small Business Act No. 102 of 1996. Through this legislation, South African SMMEs were tasked to assist with the attainment of three core socio-economic objectives, namely the reduction of unemployment, the mitigation of poverty and the equal distribution of wealth. After more than two decades it appears that South African SMMEs are not achieving the foregoing three socio-economic objectives; simultaneously being cited as having among the worst failure rates in the world. Prior research found that this dispensation is largely attributable to the non-management of economic factors which, in turn, led to the realisation of risks. To assist with the management of economic factors and related risks, a sound system of internal control should be used. Unfortunately, despite the existence of...
In South Africa, small, medium and micro enterprises (SMMEs) add significant socio-economic value to the national economy and are regarded as the driving force for economic growth. Prior research shows that these business entities’ sustainability leaves much to be desired as approximately 80% of South African SMMEs fail after being in operation for only three years; believed to be caused mostly by unmanaged economic factors. Although unmanaged economic factors may culminate in risks which adversely affect the sustainability of South African SMMEs, internal control activities can be used to mitigate the probability and potential impact of such risks. One of the most cost-effective internal control activities is that of document usage and design (e.g. source documents and internal documents). For this study, the primary objective was to determine the influence of source document usage, as an internal control measure, on the sustainability of South African small, medium and micro retail...
A sound system of internal control is a necessity for business entities; comprising five inter-related elements. The soundness of such a system is influenced by the control environment; often described as the foundation of any system of internal control. According to guidance documents, the definition and the description of the control environment are known however a common approach to assess the control environment of business entities mostly pertain to a quantitative “tick and bash” checklist. Such a yes-no-predicament causes a paradox regarding the axiom that one can only manage what one can measure. By referring to a recently developed internal control framework – the Control Legacy-K (CLK) Framework – the probability exists that the control environment of non-JSE listed business entities can be assessed in both a quantitative and qualitative manner. To this end, the primary objective of this study was to investigate whether the CLK Framework, particularly its first two steps...
Small, Medium and Micro Enterprises (SMMEs) play a significant role in the stimulation of economies around the globe. In South Africa, though SMMEs add significant socio-economic value to the national economy, approximately 75 per cent of these business entities fail after being in existence for less than four years. Among the economic factors which have been highlighted to adversely affect the sustainability of these business entities is the lack of scarce skills – in particular, that of critical innovation skills. The objective of this study was to ascertain whether critical innovation skills had any statistically significant influence on the perceived profitability of South African SMMEs. Empirical research, exploratory research, and survey research were conducted in this quantitative research study whereby 387 responses were received from South African SMME management who had to adhere to relevant delineation criteria. Based on the results, the critical innovation skills of...
In South Africa, Small, Medium and Micro Enterprises (SMMEs) are often described as the driving forces of the national economy, mainly due to the socio economic value they add. Unfortunately, prior research suggests that South African SMMEs are adversely influenced by an array of economic factors, one of which is taxation. One form of taxation, which influences an array of South African SMMEs, is that of excise taxation; as levied on specific products that are considered detrimental to the social- and/or environmental well-being of South African citizens. When taking into account that excise taxation has increased year-on-year for the past 20 years, the perception was formulated that South African tobacco-and-alcohol-selling SMMEs that are subject to excise taxation, experience weak financial sustainability. As such, this study placed emphasis on the influence excise taxation levied on products sold on the financial sustainability of tobacco-and-alcohol-selling South African SMMEs...
In order to stimulate both developing economies and developed economies around the globe policy makers have, over the years, focused their attention to Small, Medium and Micro Enterprises (SMMEs). These business entities are often regarded as the lifeblood of economies around the globe however SMMEs are reported to have high failure rates. For example, in a South African dispensation, the failure rate of SMMEs is considered to be among the worst in the world as approximately 75% fail within a period of 42 months after opening. Through research in the early-2000s, the cause of the excessive South African SMMEs failure rate has been pinned on a plethora of micro-economic factors and macro-economic factors. Over the years the list of economic factors which adversely influence the sustainability of South African SMMEs have not changed drastically, which may well probably explain the high failure rate of these business entities in more recent times. Thus, for this paper, empirical research...
